To determine the role of matrix metalloproteinase-8 (MMP-8) in acute lung injury (ALI), we delivered LPS or bleomycin by the intratracheal route to MMP-8−/− mice versus wild-type (WT) mice or subjected the mice to hyperoxia (95% O2) and measured lung inflammation and injury at intervals. MMP-8−/− mice with ALI had greater increases in lung polymorphonuclear neutrophils (PMNs) and macrophage counts, measures of alveolar capillary barrier injury, lung elastance, and mortality than WT mice with ALI. Bronchoalveolar lavage fluid (BALF) from LPS-treated MMP-8−/− mice had more MIP-1α than BALF from LPS-treated WT mice, but similar levels of other pro- and anti-inflammatory mediators. MIP-1α−/− mice with ALI had less acute lung inflammation and injury than WT mice with ALI, confirming that MIP-1α promotes acute lung inflammation and injury in mice. Genetically deleting MIP-1α in MMP-8−/− mice reduced the increased lung inflammation and injury and mortality in MMP-8−/− mice with ALI. Soluble MMP-8 cleaved and inactivated MIP-1α in vitro, but membrane-bound MMP-8 on activated PMNs had greater MIP-1α–degrading activity than soluble MMP-8. High levels of membrane-bound MMP-8 were detected on lung PMNs from LPS-treated WT mice, but soluble, active MMP-8 was not detected in BALF samples. Thus, MMP-8 has novel roles in restraining lung inflammation and in limiting alveolar capillary barrier injury during ALI in mice by inactivating MIP-1α. In addition, membrane-bound MMP-8 on activated lung PMNs is likely to be the key bioactive form of the enzyme that limits lung inflammation and alveolar capillary barrier injury during ALI.