The alveolar compartment in acute lung injury (ALI) contains high levels of tissue factor (TF) procoagulant activity favoring fibrin deposition. We previously reported that the alveolar epithelium releases TF procoagulant activity in response to a pro-inflammatory stimulus. To test the hypothesis that the alveolar epithelium further modulates intra-alveolar fibrin deposition through secretion of an endogenous inhibitor of TF, tissue factor pathway inhibitor (TFPI). To determine whether the alveolar epithelium releases TFPI, full length and truncated TFPI were measured (ELISA) in pulmonary edema fluid (EF) from patients with ARDS and a control group of patients with hydrostatic pulmonary edema (HYDRO). TFPI protein was also measured in conditioned media (CM) and cell lysates (CL) from human alveolar epithelial cells (A549) after exposure to cytomix (TNF-, IL-1, IFN-). TFPI protein levels were higher in EF from patients with ARDS vs. HYDRO. TFPI protein was increased in CM and unchanged in CL after cytomix treatment; TFPI mRNA levels (RT-PCR) did not change. Despite the high levels of TFPI, both the EF and CM retained TF procoagulant activity as measured by plasma recalcification time. The majority of intra-alveolar TFPI was in a truncated, inactive form, while the majority of TFPI released from cells was full length, suggesting different mechanisms of inactivation. The alveolar epithelium releases TFPI in response to an inflammatory stimulus, but does not increase TFPI gene transcription or protein production. Levels of intra-alveolar TFPI in ARDS are not sufficient to block intra-alveolar TF procoagulant activity due to truncation and inactivation of intra-alveolar TFPI.