The alveolar macrophage (AM) exhibits a greater capacity to synthesize bioactive leukotrienes from arachidonic acid than does its circulating precursor the peripheral blood monocyte. Macrophage differentiation in the lung entails cellular residence within both the pulmonary interstitial and alveolar compartments. In the present study, we sought to determine 1) whether this enhanced metabolic activity was acquired during maturation within the alveolar space and 2) the underlying mechanisms responsible for this upregulation. Rat AMs were separated by Percoll gradient centrifugation into four density-defined subpopulations thought to reflect their degree of maturation. On stimulation with a calcium ionophore, synthesis of leukotriene B₄ increased with the degree of maturation, although it was diminished in the oldest subpopulation. This maturation-dependent upregulation was not explained by increases in arachidonic acid release but was associated with increased expression of 5-lipoxygenase (5-LO) protein as determined by immunoblot analysis. Whereas 5-LO is primarily cytosolic in monocytes, it is known to be primarily intranuclear in unfractionated AMs. Here, the localization of 5-LO was investigated by immunofluorescence microscopy and was found to be predominantly nuclear in all AM subpopulations; by contrast, the protein was cytosolic in interstitial macrophages isolated by mechanical and enzymatic lung digestion. These divergent localization patterns in AMs and interstitial macrophages were verified in situ by immunohistochemical staining of sections of normal rat lung. When unfractionated AMs were isolated and maintained in culture for 3 days, a shift in 5-LO distribution from nucleus to cytosol was observed. We conclude that 1) nuclear import of 5-LO occurs within the alveolar space and is reversible on removal from the alveolar milieu and 2) leukotriene synthetic capacity increases further during AM residence within the alveolar space as a result of a progressive increase in the amount of 5-LO protein.