Occupational exposure to indium oxide and indium containing particles has been associated with the development of severe lung diseases called "indium lung." According to the survey of occupational hygiene, indium oxide nanoparticles have been identified in the workplaces and the lungs of workers. To date, the potential mechanism of the pneumotoxicity has been poorly understood and no effective therapies are available against "indium lung." Our present study reported that the exposure of indium oxide nanoparticles damaged lung epithelial cells and alveolar macrophages and induced pulmonary alveolar proteinosis and inflammation in rats. In the 8-week post-exposure period, the indium oxide nanoparticles still mostly accumulated in the lungs and then persistently release indium ions in two months after exposure. In vitro, the epithelial cells show the greater potential for release of indium ions from indium oxide nanoparticles compared with the macrophages. EDTA-2Na, a metal chelating agent expected to remove the indium ions, was found to significantly reduced the cytotoxicity of indium oxide nanoparticles. Herein, the pneumotoxicity may be attributed to the slow and incremental release of indium ions from indium oxide nanoparticles primary dissolved by epithelial cells and macrophages, at least partially. The study may provide some insights to the pathogenicity mechanisms of "indium lung" and some clues against the health hazards of occupational inhaled indium oxide nanoparticles at the workplaces.