Nitrogen mustard (NM) is a vesicant known to target the lung, causing acute injury which progresses to fibrosis. Evidence suggests that activated macrophages contribute to the pathologic response to NM. In these studies, we analyzed the role of lung lipids generated following NM exposure on macrophage activation and phenotype. Treatment of rats with NM (0.125 mg/kg, i.t.) resulted in a time-related increase in enlarged vacuolated macrophages in the lung. At 28 d post exposure, macrophages stained positively for Oil Red O, a marker of neutral lipids. This was correlated with an accumulation of oxidized phospholipids in lung macrophages and epithelial cells, and an increase in bronchoalveolar lavage fluid (BAL) phospholipids. RNA-sequencing analysis revealed that lipid handling pathways under control of the transcription factors LXR, FXR and PPAR-? were significantly altered following NM exposure. Whereas at 1-3 d post NM, FXR and the downstream oxidized low density lipoprotein receptor, Cd36, were increased, Lxr and the lipid extrusion pump targets, Abca1 and Abcg1 were reduced. Treatment of naÃ¯ve lung macrophages with lipid enriched fractions of BAL collected 3 d after NM resulted in upregulation of Nos2, Apoe and Ptgs2, markers of pro-inflammatory activation, while lipid-enriched BAL collected 28 d post NM upregulated expression of the anti-inflammatory markers, Il10, Cd163, and Cx3cr1, and induced the formation of lipid-laden foamy macrophages. These data suggest that NM-induced alterations in lipid handling and metabolism drive macrophage foam cell formation, potentially contributing to the development of pulmonary fibrosis. Overall design: Alveolar macrophages were collected by gentile message from male wistar rats 1 d or 28 d after intratracheal exposure to NM and from rats intratracheally exposed to PBS. There were three biological replicates per exposure group.