The hereditary disorder alpha-1 antitrypsin (AAT) deficiency results from mutations in the SERPINA1 gene and presents with emphysema in young adults and liver disease in childhood. The most common form of AAT deficiency occurs because of the Z mutation, causing the protein to fold aberrantly and accumulate in the endoplasmic reticulum (ER). This leads to ER stress and contributes significantly to the liver disease associated with the condition. In addition to hepatocytes, AAT is also synthesized by monocytes, neutrophils, and epithelial cells. In this study we show for the first time that the unfolded protein response (UPR) is activated in quiescent monocytes from ZZ individuals. Activating transcription factor 4, X-box binding protein 1, and a subset of genes involved in the UPR are increased in monocytes from ZZ compared with MM individuals. This contributes to an inflammatory phenotype with ZZ monocytes exhibiting enhanced cytokine production and activation of the NF-kappaB pathway when compared with MM monocytes. In addition, we demonstrate intracellular accumulation of AAT within the ER of ZZ monocytes. These are the first data showing that Z AAT protein accumulation induces UPR activation in peripheral blood monocytes. These findings change the current paradigm regarding lung inflammation in AAT deficiency, which up until now was derived from the protease-anti-protease hypothesis, but which now must include the exaggerated inflammatory response generated by accumulated aberrantly folded AAT in circulating blood cells.