Lung failure is responsible for significant morbidity and is a frequent cause of death in ataxia-telangiectasia (A-T). Disturbance in the redox balance of alveolar epithelial cells must be considered as a causal factor for respiratory disease in A-T. To investigate bronchoalveolar sensitivity to reactive oxygen species (ROS) and ROS-induced DNA damage, we used bleomycin (BLM) to induce experimental inflammation and fibrotic changes in the Atm-deficient mouse model. BLM or saline was administered by oropharyngeal instillation into the lung of Atm-deficient mice and wild-type mice. Mice underwent pulmonary function testing at days 0, 9, and 28, and bronchoalveolar lavage (BAL) was analysed for cell distribution and cytokines. Lung tissue was analysed by histochemistry. BLM administration resulted in a tremendous increase in lung inflammation and fibrotic changes in the lung tissue of Atm-deficient mice and was accompanied by irreversible deterioration of lung function. ATM (ataxia telangiectasia mutated) deficiency resulted in reduced cell viability, a delay in the resolution of γH2AX expression and a significant increase in intracellular ROS in pulmonary epithelial cells after BLM treatment. This was confirmed in the human epithelial cell line A549 treated with the ATM-kinase inhibitor KU55933. Our results demonstrate high bronchoalveolar sensitivity to ROS and ROS-induced DNA damage in the Atm-deficient mouse model and support the hypothesis that ATM plays a pivotal role in the control of oxidative stress-driven lung inflammation and fibrosis.