The epithelium that covers the conducting airways and alveoli is a primary target for inhaled toxic substances, and therefore a focus in inhalation toxicology. The increasing concern about the use of animal models has stimulated the development of in vitro cell culture models for analysis of the biological effects of inhaled toxicants. However, the validity of the current in vitro models and their acceptance by regulatory authorities as an alternative to animal models is a reason for concern, and requires a critical review. In this review, focused on human lung epithelial cell cultures as a model for inhalation toxicology, we discuss the choice of cells for these models, the cell culture system used, the method of exposure as well as the various read-outs to assess the cellular response. We argue that rapid developments in the 3D culture of primary epithelial cells, the use of induced pluripotent stem cells for generation of lung epithelial cells and the development of organ-on-a-chip technology are among the important developments that will allow significant advances in this field. Furthermore, we discuss the various routes of application of inhaled toxicants by air-liquid interface models as well as the vast array of read-outs that may provide essential information. We conclude that close collaboration between researchers from various disciplines is essential for development of valid methods that are suitable for replacement of animal studies for inhalation toxicology.