Transgenic mice were constructed using human alpha 1-antitrypsin M and Z genomic clones. Livers of the M lineage mice showed slight cellular pleomorphism and immunohistochemically demonstrable finely granular alpha 1-antitrypsin material in hepatocytes. Z lineage mice with five gene copies per haploid mouse genome (Z#1) demonstrated fine granular alpha 1-antitrypsin material and a few large globules. In contrast, Z lineage mice with 12 gene copies per haploid mouse genome (Z#2) demonstrated hepatocytes filled with homogeneous, eosinophilic globules that were strongly reactive with diastase and periodic acid-Schiff and antibody to alpha 1-antitrypsin. Scattered microscopic polymorphonuclear leukocyte accumulations were seen that contained extracellular alpha 1-antitrypsin material, but there was neither histological nor serological evidence of mouse infectious hepatitis. In young animals, small clusters of hepatocytes lacking alpha 1-antitrypsin material were seen. These cells were the dominant population in older animals and formed nodular arrangements. Fibrosis was not demonstrable in neonatal and young animals or in any of the controls, but perisinusoidal fibrosis was seen in older Z#2 mice. Groups of hepatocytes without alpha 1-antitrypsin material showed dysplastic changes. We conclude that the transgenic mouse is a reliable and useful model in which to study the effects of alpha 1-antitrypsin in the liver because it demonstrates changes similar to those in the human disease.