We examine whether alveolar cells can control release of O2− through regulated NADPH oxidase (NOX) 2 (NOX2) activity to maintain lung fluid homeostasis. Using FACS to purify alveolar epithelial cells, we show that type 1 cells robustly express each of the critical NOX components that catalyze the production of O2− (NOX2 or gp91 phox, p22 phox, p67 phox, p47 phox, and p40 phox subunits) as well as Rac1 at substantially higher levels than type 2 cells. Immunohistochemical labeling of lung tissue shows that Rac1 expression is cytoplasmic and resides near the apical surface of type 1 cells, whereas NOX2 coimmunoprecipitates with epithelial sodium channel (ENaC). Since Rac1 is a known regulator of NOX2, and hence O2− release, we tested whether inhibition or activation of Rac1 influenced ENaC activity. Indeed, 1 μM NSC23766 inhibition of Rac1 decreased O2− output in lung cells and significantly decreased ENaC activity from 0.87 ± 0.16 to 0.52 ± 0.16 [mean number of channels ( N) and single-channel open probability ( Po) ( NPo) ± SE, n = 6; P < 0.05] in type 2 cells. NSC23766 (10 μM) decreased ENaC NPo from 1.16 ± 0.27 to 0.38 ± 0.10 ( n = 6 in type 1 cells). Conversely, 10 ng/ml EGF (a known stimulator of both Rac1 and O2− release) increased ENaC NPo values in both type 1 and 2 cells. NPo values increased from 0.48 ± 0.21 to 0.91 ± 0.28 in type 2 cells ( P < 0.05; n = 10). In type 1 cells, ENaC activity also significantly increased from 0.40 ± 0.15 to 0.60 ± 0.23 following EGF treatment ( n = 7). Sequestering O2− using 2,2,6,6-tetramethylpiperidine- N-oxyl (TEMPO) compound prevented EGF activation of ENaC in both type 1 and 2 cells. In conclusion, we report that Rac1-mediated NOX2 activity is an important component in O2− regulation of ENaC.