Sphingomyelinase is an enzyme that plays a very important role in cell apoptosis. Ceramide, the breakdown product of sphingomyelin by sphingomyelinase, is one of the major intermediate in the signal transduction pathway that leads to cell apoptosis by various agents or factors. Environmental pollution is well known to cause severe lung dysfunctions. The mechanisms of actions of most of the environmental toxins are not clearly understood till now. However, elucidation of these mechanisms is necessary to develop specific antidotes or prophylactic drugs for prevention of environmental toxin induced lung injury. We have recently studied the signal transduction events in lung after exposure to one of the analog of sulfur mustard gas (CEES). Mustard gas has been used as a vesicant chemical warfare agent and is known to cause ARDS associated with lung injury. Mustard gas induced acute lung injury can be demonstrated by 125I-BSA leakage into lung and microscopic studies. The initial signal transduction event after CEES exposure is the rapid, transient induction of TNF-α followed by activation of both acid and neutral sphingomyelinases, resulting in high accumulation of ceramides, a second messenger involved in cell apoptosis. At the same period of time there was a transient activation of NF-κB due to CEES exposure. It is predicted that the initial activation of NF-κB was due to an adaptive response to protect the cells from damage since NF-κB is known to be an inhibitor of TNF-α/ sphingomyelinases/ceramide induced cell apoptosis. Since NF-κB disappeared after 2 hours, the cells continued being damaged due to accumulation of ceramides and activation of several caspases leading to apoptosis. These signal transduction events were associated with alteration in oxygen defense system..