Apoptosis is a genetically controlled cellular response to developmental stimuli and environmental insult that culminates in cell death. Sublethal hyperoxic injury in rodents is characterized by a complex but reproducible pattern of lung injury and repair during which the alveolar surface is damaged, denuded, and finally repopulated by type 2 alveolar epithelial cells (AEC2). Postulating that apoptosis might occur in AEC2 after hyperoxic injury, we looked for the hallmarks of apoptosis in AEC2 from hyperoxic rats. A pattern of increased DNA end labeling, DNA laddering, and induction of p53, p21, and Bax proteins, strongly suggestive of apoptosis, was seen in AEC2 cultured from hyperoxic rats when compared with control AEC2. In contrast, significant apoptosis was not detected in freshly isolated AEC2 from oxygen-treated rats. Thus the basal culture conditions appeared to be insufficient to ensure the ex vivo survival of AEC2 damaged in vivo. The oxygen-induced DNA strand breaks were blocked by the addition of 20 ng/ml of keratinocyte growth factor (KGF) to the culture medium from the time of plating and were partly inhibited by Matrigel or a soluble extract of Matrigel. KGF treatment resulted in a partial reduction in the expression of the p21, p53, and Bax proteins but had no effect on DNA laddering. We conclude that sublethal doses of oxygen in vivo cause damage to AEC2, resulting in apoptosis in ex vivo culture, and that KGF can reduce the oxygen-induced DNA damage. We speculate that KGF plays a role as a survival factor in AEC2 by limiting apoptosis in the lung after acute hyperoxic injury.