We compared carcinoembryonic antigen (CEA) levels in bronchoalveolar lavage (BAL) fluid and serum of patients with lung cancer, pneumonia, and healthy individuals to determine the usefulness of CEA in diagnosing lung cancer not visible endoscopically. Cancer patients had CEA lavage fluid levels (4,650 +/- 1,565 ng/mg of albumin) significantly higher than pneumonia patients (755 +/- 346 ng/mg) or healthy individuals, smokers (252 +/- 48 ng/ml), and non-smokers (175 +/- 6 ng/mg). In serum, CEA assay cannot discern between cancer (35 +/- 13 ng/ml) and pneumonia (4.6 +/- 1.4 ng/ml) (p = 0.06). Using 1,000 ng/mg of albumin as the cutting point in BAL fluid, sensitivity and specificity were 77 percent and 94 percent, respectively. In serum, 5 ng/ml provided a sensitivity of 55 percent and specificity of 91 percent. Positive and negative predictive values were 77 percent and 94 percent in BAL, respectively, and 62 percent and 89 percent in serum, respectively. Using a combination of serum and BAL fluid CEA levels, the sensitivity and specificity were 88 percent and positive and negative predictive values were 66 percent and 96 percent, respectively. When used in combination with serum levels of CEA or transbronchial biopsy, the diagnostic yield increased up to 88 percent. Thus, although CEA determination in BAL fluid improves diagnostic yield, it should not be used as the only diagnostic procedure.