BACKGROUND: A sizeable body of data demonstrates that membrane ICAM-1 (mICAM-1) plays a significant role in host defense in a site-specific fashion. On the pulmonary vascular endothelium, mICAM-1 is necessary for normal leukocyte recruitment during acute inflammation. On alveolar epithelial cells (AECs), we have shown previously that the presence of normal mICAM-1 is essential for optimal alveolar macrophage (AM) function. We have also shown that ICAM-1 is present in the alveolar space as a soluble protein that is likely produced through cleavage of mICAM-1. Soluble intercellular adhesion molecule-1 (sICAM-1) is abundantly present in the alveolar lining fluid of the normal lung and could be generated by proteolytic cleavage of mICAM-1, which is highly expressed on type I AECs. Although a growing body of data suggesting that intravascular sICAM-1 has functional effects, little is known about sICAM-1 in the alveolus. We hypothesized that sICAM-1 in the alveolar space modulates the innate immune response and alters the response to pulmonary infection. METHODS: Using the surfactant protein C (SPC) promoter, we developed a transgenic mouse (SPC-sICAM-1) that constitutively overexpresses sICAM-1 in the distal lung, and compared the responses of wild-type and SPC-sICAM-1 mice following intranasal inoculation with K. pneumoniae. RESULTS: SPC-sICAM-1 mice demonstrated increased mortality and increased systemic dissemination of organisms compared with wild-type mice. We also found that inflammatory responses were significantly increased in SPC-sICAM-1 mice compared with wild-type mice but there were no difference in lung CFU between groups. CONCLUSIONS: We conclude that alveolar sICAM-1 modulates pulmonary inflammation. Manipulating ICAM-1 interactions therapeutically may modulate the host response to Gram negative pulmonary infections.