This report describes structural changes occurring in the terminal bronchioles of rats exposed to low levels of NO2 continuously for 6 weeks. In addition, the relative susceptibility of epithelial cells to oxidants and the comparative toxicity of NO2 and O3 are discussed. Terminal bronchioles isolated from rats exposed 5 days/week to 2.0 ppm NO2 (plus two 1-hr daily spikes to 6.0 ppm) were found to have 19% less ciliated cells per unit area of epithelial basement membrane. The remaining ciliated cells had a reduced mean surface area (-29%). The shape of the Clara cell changed with reduced size of the dome protrusions but increased cell contact with the basement membrane. These data indicate that exposure to 2.0 ppm NO2 (+ spikes) for 6 weeks caused injuries to cilia and ciliated cells and possible Clara cell differentiation in the terminal bronchioles of adult rats. Exposures of adult or juvenile rats to 0.5 ppm NO2 (+ two 1-hr daily spikes 5 days/week to 1.5 ppm) did not cause morphologically measurable injuries in the terminal bronchioles. The severity of the concentration-dependent epithelial cell reactions to NO2 and O3 in adult rat terminal bronchioles were compared to those occurring in the proximal alveolar regions (PAR). Epithelial cells in the PAR appeared to be more susceptible to oxidant insult since both 0.5 ppm NO2 and 0.25 ppm O3 were found to cause epithelial injury only in the PAR. Comparison of epithelial reactions to 6-week exposures to either NO2 or O3 indicated that 0.25 ppm O3 caused four times as much increase in the number of type I epithelial cells as did 2 ppm (+spikes) NO2. Therefore, O3 could be 40 times more toxic than NO2 in the PAR on the basis of the inspired concentration and the focal response. On the other hand, there was no loss of ciliated cells following the 0.25 ppm O3 exposure. This suggests that the ratio of O3 to NO2 toxicity in the terminal bronchioles is considerably less than 10. The relative toxicity of the two oxidant gases appears to be site specific.