Tissue factor (TF) initiates the extrinsic coagulation cascade in response to tissue injury, leading to local fibrin deposition. Low levels of TF in mice are associated with increased severity of acute lung injury (ALI) after intratracheal LPS administration. However, the cellular sources of the TF required for protection from LPS-induced ALI remain unknown. In the current study, transgenic mice with cell-specific deletions of TF in the lung epithelium or myeloid cells were treated with intratracheal LPS to determine the cellular sources of TF important in direct ALI. Cell-specific deletion of TF in the lung epithelium reduced total lung TF expression to 39% of wild-type (WT) levels at baseline and to 29% of WT levels after intratracheal LPS. In contrast, there was no reduction of TF with myeloid cell TF deletion. Mice lacking myeloid cell TF did not differ from WT mice in coagulation, inflammation, permeability, or hemorrhage. However, mice lacking lung epithelial TF had increased tissue injury, impaired activation of coagulation in the airspace, disrupted alveolar permeability, and increased alveolar hemorrhage after intratracheal LPS. Deletion of epithelial TF did not affect alveolar permeability in an indirect model of ALI caused by systemic LPS infusion. These studies demonstrate that the lung epithelium is the primary source of TF in the lung, contributing 60-70% of total lung TF, and that lung epithelial, but not myeloid, TF may be protective in direct ALI.