Cigarette smoke (CS) is the main risk factor for chronic obstructive pulmonary disease (COPD). Terminal bronchioles are critical zones in the pathophysiology of COPD, but little is known about the cellular and molecular changes that occur in cells lining terminal bronchioles in response to CS. We subjected C57BL/6 mice to CS (6d/wk, up to 6mo), looked for morphological changes lining the terminal bronchioles, and used laser capture microdissection to selectively isolate cells in terminal bronchioles to study gene expression. Morphological and immunohistochemical analyses showed that Clara cell predominance remained despite 6 months of CS exposure. Since Clara cells have a role in protection against oxidative stress, we focused on the expression of antioxidant/detoxification genes using microarray analysis. Of the 35 antioxidant/detoxification genes with at least 2.5-fold increased expression in response to 6 month CS exposure, 21 were NF-E2-related factor 2 (Nrf2)-regulated genes. Among these were cytochrome P450 1b1, glutathione reductase, thioredoxin reductase, and members of the glutathione S-transferase family, as well as Nrf2 itself. In vitro studies using immortalized murine Clara cells (C22) showed that CS induced the stabilization and nuclear translocation of Nrf2, which correlated with the induction of antioxidant and detoxification genes. Furthermore, decreasing Nrf2 expression by siRNA resulted in a corresponding decrease in CS-induced expression of several antioxidant and detoxification genes by C22 cells. These data suggest that the protective response by Clara cells to CS exposure is predominantly regulated by the transcription factor Nrf2.