Evidence suggests that lung structure and function are partly maintained by a balance between the competing arginine-metabolizing enzymes arginase and nitric oxide (NO) synthase. Asymmetric dimethylarginine (ADMA) is an endogenous inhibitor of NO synthase. It is metabolized by dimethylarginine dimethylaminohydrolase 2 (DDAH-2), which is oxidant-sensitive. The mechanism that induces excess lung collagen deposition in burned patients has not yet been explored. Our objective was to investigate the role of ADMA and the arginase pathway in acute lung injury. An ovine model for burn and smoke inhalation injury was used to assess excess lung collagen deposition. Sheep were deeply anesthetized during the injury, mechanically ventilated, resuscitated with fluid, and killed after either 2 or 3 weeks. Lungs were assessed histologically and biochemically for collagen content, arginase activity, lipid peroxidation product and antioxidant concentration, and protein concentrations. Plasma was assessed for amino acid and nitrate/nitrite concentrations. Burn and inhalation injury resulted in significantly reduced pulmonary function and increased lung collagen deposition. These physiological changes were associated with significantly increased lung arginase activity, collagen synthesis precursor ornithine aminotransferase, and ornithine decarboxylase, which is associated with cell proliferation. Significant decreases in plasma nitrate/nitrite after injury were associated with increased lung ADMA concentrations and decreased DDAH-2 expression. The decreased DDAH-2 expression was associated with significantly increased lipid peroxidation product and decreased antioxidant content in the lung. These data support that excess lung collagen deposition and reduced pulmonary function in acute lung injury after burn and inhalation injury are mediated through the arginase pathway.