The fetal lung normally contains immature monocytes and very few mature macrophages. The chorioamnionitis frequently associated with preterm birth induces monocyte influx into the fetal lung. Previous studies demonstrated that monocytes in the developing lung can mediate lung injury responses that resemble BPD in humans. We hypothesized that chorioamnionitis would induce maturation of immature monocytes in the fetal lung. Groups of 3-7 time-mated ewes received saline or 10 mg endotoxin (E.coli 055:B5) in saline by intra-amniotic injection for intervals from 1 day to 14 days before operative delivery at 124 days gestational age. Monocytic cells from lung tissue were recovered using Percoll gradients. Monocytic cells consistent with macrophages were identified morphologically and by MHC class II expression. An increase in macrophages was preceded by induction of GM-CSF (granulocyte-macrophage-colony stimulating factor) in the lung and subsequent activation of the transcription factor PU.1. The production of IL-6 by monocytes/macrophages in response to endotoxin challenge in-vitro increased 7 and 14 days after exposure to intra-amniotic endotoxin. Recombinant TNF-alpha induced IL-6 production by lung monocytic cells exposed to intra-amniotic endotoxin but not in control cells. Monocytic phagocytosis of apoptotic neutrophils also increased 7 and 14 days after exposure to intra-amniotic endotoxin. Intra-amniotic endotoxin induced lung monocytes to develop into functionally mature cells consistent with macrophages. These findings have implications for lung immune responses after exposure to chorioamnionitis.