Abstract: Sustained oxidative stress caused by cigarette smoking induces a chronic inflammatory response, resulting in the destruction of the alveolar cell wall characteristic of emphysema. The loss of tissue may involve the progressive depletion of epithelial cells through inhibition of proliferation leading to cell death. The cell cycle regulator p21^waf1/cip1 acts as a G₁/S and G₂/M phase checkpoint regulator. We hypothesize that cigarette smoke‐induced oxidative stress and transforming growth factor beta 1 (TGF‐β₁) may inhibit cellular proliferation by p21^waf1/cip1 in type II alveolar epithelial cells (A549). A significant increase was observed in p21^waf1/cip1 mRNA expression in A549 cells by cigarette smoke condensate, H₂O₂, and TGF‐β₁. In conclusion, cigarette smoke‐induced oxidative stress and TGF‐β₁ modulate expression of the cell cycle inhibitor p21^waf1/cip1. This may be important in the growth arrest and cell survival of alveolar type II cells in the G₁ phase.