The permeability of the alveolar epithelium following alloxan challenge was studied in dogs by determining transfer of radiolabeled solutes between alveolus and blood. Two days after injection of 131-Ialbumin into the blood, anesthetized dogs had the air space of part of one lung isolated by a balloon catheter lodged in a bronchus. We infused the atelectatis-isolated area with normal saline containing trace amounts of Blue Dextran, 125Ialbumin, and 57Co-cyanocobalamin; challenged six animals with intravenous alloxan, and six animals with alloxan added to the alveolar saline. During the pulmonary edema, 57Co-cyanocabalamin and 125I-albumin appeared in the blood and 131I-albumin entered the alveolar saline. The animals challenged by alveolar instillation showed a greater permeability change (P less than 0.05). The bidirectional transfer of macromolecules indicates that alloxan produces a change in the permeability of the alveolar epithelium, allowing diffusional exchange of macromolecules. Since alveolar flooding in hemodynamic edema does not show a similar change in the permeability of the epithelial lining, alveolar flooding in alloxan edema is not due solely to an effect on the endothelial membrane, but also to a direct effect on the epithelial membrane.