Amiodarone (AD) is gaining support as a first-line antiarrhythmic drug despite its potentially fatal pulmonary toxicity involving inflammation and fibrosis. We previously reported a model for this amiodarone-induced pulmonary toxicity (AIPT) in which F344 rats were intratracheally (i.t.) instilled with AD (6.25 mg/kg) in sterile water on days 0 and 2, which led to transient pulmonary inflammation and lung damage and subsequent fibrosis. The goals of this study were to determine the direct effect of the drug in the lung damage occurring after i.t. AD administration, to identify its location, and to examine its potential mechanisms. Using bronchoalveolar lavage and laser-scanning confocal microscopy, it was discovered that AD instillation produces rapid and massive damage to the alveolar–capillary barrier and damage or death to lung airway and parenchymal cells. While AD in solution was found to be capable of generating hydroxyl radicals, protection from AD-induced damage could not be obtained by incorporating water-soluble antioxidants in the drug solution. However, damage induced by free-radicals could still occur after AD partitions into lipid membranes. AD could also be directly disrupting cellular membranes via its amphiphilic structure. It is not known if the mechanism(s) of damage following i.t. AD treatment are similar to the mechanisms that underlie human AIPT. Therefore these data suggest that investigators should use caution in extrapolating results from animal studies that utilize i.t. administration of AD to human AIPT.