Chronic airway rejection, characterized by lymphocytic bronchitis, epithelial cell damage, and obliterative bronchiolitis (OB), limits long-term survival after lung transplantation. The transcription factor early growth response gene-1 (Egr-1) induces diverse inflammatory mediators, some involved in OB pathogenesis. An orthotopic mouse tracheal transplant model was used to determine whether Egr-1 promotes development of airway allograft rejection. Significantly higher Egr-1 mRNA levels were seen in allografts (3.2-fold increase versus isografts, P = 0.012). Allografts revealed thickening of epithelial and subepithelial airway layers (51 ± 4% luminal encroachment for allografts vs. 20 ±3% for isografts, P < 0.0001) marked by significant lymphocytic infiltration. Absence of the Egr-1 gene in donor (but not recipient) tissue resulted in significant reduction in luminal narrowing (34 ± 4%, P = 0.0001) with corresponding diminution of T cell infiltration. Egr-1 null allografts exihibited a striking reduction in inducible nitric oxide synthase (iNOS) expression. Effector cytokines previously implicated in OB pathogenesis, with known Egr-1 promoter motifs (IL-1 and JE/MCP-1), were reduced in Egr-1 null allografts. These data suggest a paradigm wherein local induction of Egr-1 in tracheal allografts drives expression of inflammatory mediators responsible for lymphocyte recruitment and tissue destruction characteristic of airway rejection.