Cigarette smoke (CS) directly causes lung injury and inflammation. The epithelium is the barrier between inhaled air, which contains the toxic compounds in CS, and the underlying tissue. To study CS-induced cell injury and antioxidant responses, we analyzed lung tissue, primary alveolar type II (ATII) cells and alveolar macrophages (AM) isolated from deidentified nonsmoker, smoker, and ex-smoker lung donors. Nuclear factor erythroid 2–related factor 2 (Nrf2) is the principle transcription factor that regulates expression of phase II detoxifying antioxidant enzymes. In lung tissue and ATII cells obtained from moderate smokers, we found Nrf2 translocation to the nucleus. In ATII cells derived from smokers, we observed increased content of IL-8 and IL-6 in comparison with nonsmokers. Moreover, in lung tissue obtained from heavy smokers, we observed apoptotic ATII, alveolar type I cells, AM, and endothelial cells by using TUNEL assay. We also transdifferentiated ATII cells into alveolar type I–like (ATI-like) cells for in vitro studies. We exposed ATII cells, ATI-like cells, and AM to 1%, 3%, and 6% cigarette smoke extract (CSE) for 4 hours and for 24 hours, and we found the highest expression of Nrf2, HO-1, and NQO1 in ATI-like cells. We selected these cells for our further studies, and we also observed oxidative stress as measured by immunocytofluorescence for 4-HNE, Nrf2 translocation to the nucleus, and the percentage of apoptotic cells increasing in the CSE concentration-dependent manner. We found that necrosis of ATI-like cells induced by CSE was prevented by antioxidant compounds N-acetylcysteine and trolox. Our results suggest that CS causes Nrf2 activation and DNA damage. Identification of the pathways whereby CS generates oxidative stress and induces apoptosis may further our understanding of the pathogenesis of CS-induced lung diseases.