Recently, we discovered that Aflatoxin G1 (AFG1 ) induces chronic lung inflammatory responses, which may contribute to lung tumorigenesis in Balb/C mice. The cancer cells originate from alveolar type II cells (AT-II cells). The activated AT-II cells express high levels of MHC-II and COX-2, may exhibit altered phenotypes, and likely inhibit antitumor immunity by triggering regulatory T cells (Tregs). However, the mechanism underlying phenotypic alterations of AT-II cells caused by AFG1 -induced inflammation remains unknown. In this study, increased MHC-II expression in alveolar epithelium was observed and associated with enhanced Treg infiltration in mouse lung tissues with AFG1 -induced inflammation. This provides a link between phenotypically altered AT-II cells and Treg activity in the AFG1 -induced inflammatory microenvironment. AFG1 -activated AT-II cells underwent phenotypic maturation since AFG1 upregulated MHC-II expression on A549 cells and primary human AT-II cells in vitro. However, mature AT-II cells may exhibit insufficient antigen presentation, which is necessary to activate effector T cells, due to the absence of CD80 and CD86. Furthermore, we treated A549 cells with AFG1 and TNF-α together to mimic an AFG1 -induced inflammatory response in vitro, and we found that TNF-α and AFG1 coordinately enhanced MHC-II, CD54, COX-2, IL-10, and TGF-β expression levels in A549 cells compared to AFG1 alone. The phenotypic alterations of A549 cells in response to the combination of TNF-α and AFG1 were mainly regulated by TNF-α-mediated induction of the NF-κB pathway. Thus, enhanced phenotypic alterations of AT-II cells were induced in response to AFG1 -induced inflammation. Thus, AT-II cells are likely to suppress anti-tumor immunity by triggering Treg activity.