Class II major histocompatibility complex (Ia)-bearing dendritic cells (DC) from airway epithelium and lung parenchyma express low-moderate antigen presenting cell (APC) activity when freshly isolated. However, this function is markedly upregulated during overnight culture in a manner analogous to epidermal Langerhans cells. The in vitro "maturation" process is inhibited by coculture with pulmonary alveolar macrophages (PAM) across a semipermeable membrane, and the degree of inhibition achieved can be markedly increased by the presence of tumor necrosis factor alpha. In addition, PAM-mediated suppression of DC function is abrogated via inhibition of the nitric oxide synthetase pathway. Functional maturation of the DC is accompanied by increased expression of surface Ia, which is also inhibited in the presence of PAM. Prior elimination of PAM from DC donors via intratracheal administration of the cytotoxic drug dichloromethylene diphosphonate in liposomes, 24-72 h before lung DC preparation, achieves a comparable upregulation of APC activity, suggesting that (consistent with the in vitro data) the resident PAM population actively suppresses the APC function of lung DC in situ. In support of the feasibility of such a regulatory mechanism, electron microscopic examination of normal lung fixed by intravascular perfusion in the inflated state (which optimally preserves PAM in situ), revealed that the majority are preferentially localized in recesses at the alveolar septal junctions. In this position, the PAM are in intimate association with the alveolar epithelial surface, and are effectively separated by as little as 0.2 microns from underlying interstitial spaces which contain the peripheral lung DC population. A similar juxtaposition of airway intraepithelial DC is demonstrated with underlying submucosal tissue macrophages, where the separation between the two cell populations is effectively the width of the basal lamina.