The bronchiolar Clara cell is one of the primary targets in adult mammals for environmental contaminants metabolized by cytochrome P450 (CYP) monooxygenases. Previous studies show that the onset of CYP expression in Clara cells occurs during postnatal lung development. This study was designed to determine whether differentiating Clara cells are susceptible to CYP-activated cytotoxicants and whether these substances can influence subsequent cytodifferentiation. Adult and neonatal (5-9 days of age) rabbits were given a single dose of 4-ipomeanol (IPO) i.p. and sacrificed 2 or 7 days later. Their lungs were removed and assessed morphologically, immunohistochemically or for CYP activity. Treatment with 10 mg/kg of IPO (0.25 of the LD50 for adults) killed 6 of 10 neonatal rabbits. At a dose of 5 mg/kg of IPO, most terminal bronchiolar cells were destroyed in the neonatal rabbits. The basal lamina of terminal bronchioles was either bare or lined by squamous or low cuboidal epithelium and macrophages. Terminal bronchiolar epithelium in neonates was minimally affected by a dose of 1 mg/kg of IPO. The terminal bronchioles in adults appeared nearly unaffected by either 1 or 5 mg/kg of IPO. Interalveolar septa were unaffected in all treated animals. Lung microsomal enzymes from neonatal rabbits metabolized IPO to reactive intermediates at less than one-third the rate in the lungs of adults. Seven days (15 days of age) after IPO treatment, CYP activity (as measured by pentoxyresorufin O-dealkylation) was one-half that of age-matched controls after a dose of 5 mg/kg but equaled control activity after 1 mg/kg. Immunohistochemical analysis, using antibodies to CYP2B4, CYP4B and CYP reductase, indicated that the decrease in activity seen with a dose of 5 mg/kg of IPO was the result of a loss of immunoreactive CYP proteins from the cuboidal cells of terminal bronchioles. It was concluded that, in neonatal animals, differentiating Clara cells are more susceptible to injury by bioactivated cytotoxicants than are differentiated cells in adults, despite the neonate's lower levels of CYP monooxygenases. Furthermore, IPO-induced injury impairs the normal pattern of postnatal Clara cell differentiation.