We investigated the 1 alpha-hydroxylation of vitamin D3 sterols by cultured pulmonary alveolar macrophages (PAM) from patients with sarcoidosis with or without clinically abnormal calcium homeostasis. Like the naturally occurring renal 1 alpha-hydroxylase, the PAM 1 alpha-hydroxylation reaction exhibited a high affinity for 25-hydroxyvitamin D3 (25-OH-D3) and a preference for substrates containing a 25-hydroxyl group in the side chain of the sterol. Unlike the renal enzyme, the PAM 1 alpha-hydroxylating mechanism was not accompanied by 24-hydroxylating activity, even after preincubation with 75 nM 1,25-dihydroxyvitamin D3 [1,25-(OH)2-D3] or exposure to high concentrations of substrate (500 nM 25-OH-D3). The PAM 25-OH-D3-1 alpha-hydroxylation reaction was stimulated by gamma interferon and inhibited by exposure to the glucocorticoid dexamethasone. The characteristics of the PAM hydroxylation process in vitro appear to reflect the efficiency of the extrarenal production of 1,25-(OH)2-D3 and the therapeutic efficacy of glucocorticoids in patients with sarcoidosis and disordered calcium metabolism.