More than 20,000 burn injury victims suffer from smoke inhalation injury in the United States annually. In an ovine model of acute lung injury, γ-tocopherol had a beneficial effect when nebulized into the airway. We hypothesize that γ-tocopherol scavenges reactive oxygen species (ROS) and reactive nitrogen species resulting from burn and smoke inhalation injury and that these ROS/reactive nitrogen species activate the arginase pathway, leading to increased collagen deposition and decreased pulmonary function. To test this hypothesis, ewes were operatively prepared for chronic study, then they were randomly divided into groups (n = 8): uninjured, injured, or injured with nebulization (γ-tocopherol [950 mg/g] and α-tocopherol [40 mg/g] from hours 3 to 48 after the injury). The injury, under deep anesthesia, consisted of a 20% total body surface burn and 36 breaths of cotton smoke; all animals were killed after 3 weeks. Treatment increased lung γ-tocopherol at 3 weeks after γ-tocopherol nebulization compared with injured sheep (1.75 ± 0.62 nmol/g vs. 0.45 ± 0.06, P < 0.05). The expression of dimethylarginine dimethylaminohydrolase-2, which degrades asymmetrical dimethylarginine, a nitric oxide synthase inhibitor, significantly increases with γ-tocopherol treatment compared with injured sheep (P < 0.05). Arginase activity (0.15 ± 0.02 μM urea/μg protein vs. 0.24 ± 0.009, P < 0.05), ornithine aminotransferase (11,720 ± 888 vs. 13,170 ± 1,775), and collagen deposition (0.62 ± 0.12 μM hydroxyproline/μg protein vs. 1.02 ± 0.13, P < 0.05) significantly decrease with γ-tocopherol compared with injured animals without γ-tocopherol. The decreases in arginase and collagen with γ-tocopherol are associated with significantly increased diffusion capacity (P < 0.05) and decreased lung wet-to-dry ratio (P < 0.05). Smoke-induced chronic pulmonary dysfunction is mediated through the ROS/asymmetrical dimethylarginine/arginase pathway, and ROS scavengers such as γ-tocopherol may be a potential therapeutic management of burn patients with inhalation injury.