The functional roles of neutral lipids are poorly understood in the lung. Blocking cholesteryl ester and triglyceride metabolism in lysosomal acid lipase gene knockout mice (lal-/-) resulted in a high level of neutrophil influx in the lungs as early as 2 mo of age. Bronchoalveolar macrophages appeared foamy and gradually increased in number with age progression. Affymetrix GeneChip array analysis of lung mRNA showed increased levels of proinflammatory cytokine (including IL-1beta, IL-6, and TNF-alpha) and matrix metalloproteinase (including MMP-8, MMP-9, and MMP-12) expression in lal-/- mice. With age progression, some areas of lal-/- mice developed severe abnormal cell proliferation and alveolar remodeling. In other areas, alveolar destruction (i.e., emphysema) was observed. In addition, Clara cell hypertrophy and hyperplasia developed in conducting airways. The pathophysiological phenotypes in the lal-/- mouse lungs became more severe with increasing age. The studies support the concept that neutral lipid metabolites play essential roles in pulmonary homeostasis, inflammatory responses, remodeling, and injury repair.