Small-sized titanium dioxide (TiO2) nanoparticles (< 10 nm) are widely used in both industry and daily life due to their enhanced thermomagnetic and photocatalytic properties and surface activity. However, their increasing use increases the health risk of people exposed to these particles, either occupationally or environmentally. This study was performed to evaluate the effect of small-sized TiO2 nanoparticles on the immune function of rat pulmonary alveolar macrophages in vivo. Forty-two rats were intra-tracheally instilled with 0.5, 5 or 50 mg/kg of NP-1 and F-1 TiO2 primary particles with a median size of 5 nm and 200 nm, respectively. Rat pulmonary alveolar macrophages were obtained from lung lavage fluids using a closed chest technique. Cells were assessed for morphology, phagocytic ability and chemotactic ability, Fc receptor expression, MHC-class II molecule expression, and expression of nitric oxide (NO) and tumor necrosis factor-alpha (TNF-alpha). The result showed that the inhalation of NP-1 TiO2 particles induced the membrane and ultrastructure damage of PAMs. The phagocytic ability of the macrophages increased when they were exposed to low dose of NP-1 TiO2 and decreased when they were exposed to high dose of NP-1 TiO2. Exposure to NP-1 TiO2 also decreased the chemotactic ability of the macrophages as well as decreasing the expression of Fc receptors and MHC-class II on the cell surface. The mechanism responsible for these changes was mediated via altering NO and TNF-alpha expression by the PAMs. The amount of NO and TNF-alpha secreted by macrophages gradually increased as the dosage of TiO2 nanoparticles increased. Small-sized TiO2 nanoparticles (but not the fine counterpart) elicited stronger NO and TNF-alpha production. The present study suggests that both damage to the cell structure and pulmonary alveolar macrophage dysfunction may occur, leading to a reduction in both non-specific and specific immune responses in individuals exposed to small-sized TiO2 nanoparticles.