Leukotriene A₄ (LTA₄) hydrolase catalyzes the final step in LTB₄ synthesis. In addition to its role in LTB₄ synthesis, the enzyme possesses aminopeptidase activity. In this study, we sought to define the subcellular distribution of LTA₄ hydrolase in alveolar epithelial cells, which lack 5-lipoxygenase and do not synthesize LTA₄. Immunohistochemical staining localized LTA₄ hydrolase in the nucleus of type II but not type I alveolar epithelial cells of normal mouse, human and rat lungs. Nuclear localization of LTA₄ hydrolase was also demonstrated in proliferating type II-like A549 cells. The apparent redistribution of LTA₄ hydrolase from the nucleus to the cytoplasm during type II to type I cell differentiation in vivo was recapitulated in vitro. Surprisingly, this change in localization of LTA₄ hydrolase did not affect the capacity of isolated cells to convert LTA₄ to LTB₄. However, proliferation of A549 cells was inhibited by the aminopeptidase inhibitor bestatin. Nuclear accumulation of LTA₄ hydrolase was also conspicuous in epithelial cells during alveolar repair following bleomycin-induced acute lung injury in mice, as well as in hyperplastic type II cells associated with fibrotic lung tissues from patients with idiopathic pulmonary fibrosis. These results show for the first time that LTA₄ hydrolase can be accumulated in the nucleus of type II alveolar epithelial cells, and that redistribution of the enzyme to the cytoplasm occurs with differentiation to the type I phenotype. Furthermore, the aminopeptidase activity of LTA₄ hydrolase within the nucleus may play a role in promoting epithelial cell growth.