The health effects of silver nanoparticles (AgNPs) have not been well investigated, despite AgNPs now being widely used in consumer products. We investigated the metabolic behavior and toxicity of AgNPs in comparison to silver nitrate (AgNO3) both in vivo and in vitro. AgNPs (20 nm diameter) suspended in 1% albumin solution or AgNO3 solution was injected into the mouse lung. Less than 1% of the initial dose of AgNPs and more than 7% of the initial dose of AgNO3 was recovered in the liver 4h after administration, suggesting that the ionic form of silver was absorbed by the lung tissue and entered the systemic circulation more efficiently than AgNPs. The pro-inflammatory cytokine, IL-1β, and neutrophils in bronchoalveolar lavage fluid (BALF) increased following intratracheal instillation of AgNPs or AgNO3. AgNO3 recruited more neutrophils in the alveolar space than did AgNPs. In the in vitro study, AgNO3 was more cytotoxic than 20, 60, or 100 nm diameter AgNPs in a mouse macrophage cell line (J774.1). To investigate the intracellular distribution of Ag in detail, J774.1 cells were exposed to AgNO3 or 20 nm AgNPs and the distribution of Ag to cytosolic proteins was investigated using HPLC-inductively coupled plasma-mass spectrometry (HPLC-ICP-MS). Ag was mainly distributed to metallothioneins (MT) and to high molecular weight proteins in AgNO3- and AgNPs-exposed cells, respectively. Confocal laser microscopic examination of LysoTracker(®)-labeled cells indicated that AgNPs were colocalized with lysosomes in J774.1 cells. These results suggest that AgNPs were transported to lysosomes and only gradually dissolved in the macrophages, causing milder inflammatory stimulation in the mouse lung compared to AgNO3.