The acute respiratory distress syndrome (ARDS) is a severe lung injury in patients with sepsis and other acute inflammatory insults, which is characterized by fibrin deposition in the pulmonary parenchyma, vasculature, and airspaces. Recent evidence suggests that progressive ARDS is closely linked to activation of inflammation and coagulation. Coagulation becomes activated by circulating endotoxin or bacteria, and a procoagulant state develops in the vascular and the alveolar compartments of the lung. This state is Tissue Factor (TF)-dependent and associated with increased elaboration of inflammatory cytokines. A similar procoagulant state is found in bronchoalveolar lavage of patients with ARDS, suggesting that extravascular coagulation contributes to lung inflammation. TF and other coagulation proteins, including Factor Xa, thrombin, and fibrin, also contribute to the pathogenesis of acute lung injury through multi-level interactions with inflammatory effectors, in which these proteins coordinately act as regulators of tissue injury responses. Each coagulation protein has direct and independent effects on inflammatory events that influences lung injury through changes in cytokine elaboration, inflammatory cell migration and activation, surfactant function, and repair mechanisms. New interventional strategies directed at procoagulant activity highlight the importance of the coagulation system to acute lung injury and suggest that blockade of initiation of coagulation may have therapeutic benefit in patients with ARDS.