Parenteral administration of naphthalene produces a dose-dependent and tissue-, species-, and cell-selective lesion of murine Clara cells. The rate and stereoselectivity of naphthalene metabolism by microsomal preparations correlate with tissue and species differences in cytotoxicity. Because earlier studies used microsomes obtained from whole tissue, differences in susceptibility of proximal and distal airways could not be related to differences in the metabolic activation or detoxication of naphthalene. Specific subcompartments of the respiratory system, obtained by microdissection, have been used to study the cytochrome P450-dependent metabolism of naphthalene and the epoxide hydrolase/glutathione transferase-dependent metabolism of naphthalene oxide. The rates of naphthalene metabolism were substantially higher in mouse airways than in comparable airways of hamsters or rats. Rates of metabolism were higher in distal airways than in the trachea of all species studied. Metabolism in mouse airways was highly stereoselective, whereas that in hamster and rat tissues was not. Nonciliated cells at all airway levels in mice were heavily labeled with an antibody to cytochrome P450 2F2; little labeling was observed in any portion of rat and hamster lungs. Postmitochondrial supernatants prepared from mouse and hamster airways metabolized racemic naphthalene oxide to diol and glutathione adducts at substantially higher rates than did comparable preparations from rats. Although glutathione levels varied 2-4-fold at different airway levels in the three species studied, levels at the most susceptible site (mouse distal bronchioles) were as high as or higher than those at other, less susceptible, sites. These studies support the view that the rate and stereoselectivity of naphthalene metabolism to naphthalene 1R,2S-oxide catalyzed by cytochrome P450 2F2 are critical determinants in the species-specific and region-selective cytotoxicity of naphthalene in mice. The lack of major differences in the catalytic activity or enantioselectivity of putative detoxication enzymes (epoxide hydrolase or glutathione transferases) between mouse and hamster tissue, combined with data showing that the differences in the metabolic fate of naphthalene oxide in proximal versus distal airways are not dramatic, suggests that the initial epoxidation of naphthalene is an important factor in site-selective toxicity. These studies support the need to use tissue from defined airway levels for studies on the relationship of biochemical and metabolic factors important in cellular injury by lung toxicants, such as naphthalene, where there are dramatic regional differences in susceptibility to injury within the respiratory system.