Chronic lipopolysaccharide (LPS) exposure may contribute to the pathogenesis of a number of lung diseases including COPD and emphysema. We sought to develop a large-animal model of emphysema using repeated LPS administration into sheep lung segments. An experimental protocol was designed to facilitate comparisons with elastase-treated and control segments within the same lung of individual sheep. Histopathologic evaluation of segments treated with LPS demonstrated low-grade inflammation characterized by an increase in the number of intra-alveolar macrophages and lymphocytes. Treated segments demonstrated a significant reduction in airspace surface area (ASA), an increase in percent disrupted alveolar attachments and the distance between normal alveolar attachments, and a reduction in the number of normal alveolar attachments surrounding nonrespiratory bronchioles. Coefficient of variation of individual ASA measurements in elastase-treated segments was indicative of a heterogeneous parenchymal response, in contrast to that associated with chronic LPS treatment. Our results demonstrate that chronic LPS treatment of individual lung segments in sheep induces microscopic emphysema qualitatively and quantitatively consistent with both accepted pathologic definitions of this condition and with that produced by airway instillation of elastolytic enzymes. Development of this phenotype is associated with evidence of downregulated activation of transforming growth factor beta.