We describe the development, evaluation, and application of a new plume-in-grid model for investigating the subgrid-scale effects, associated with NOx emissions from large elevated point sources, on O3 formation. Traditional Eulerian air quality models cannot resolve the strong concentration gradients created by plumes emitted from large point sources. Although several plume-in-grid approaches have been used in the past to address this issue, they have been limited by their simplistic simulation of plume dispersion and/or chemistry and their lack of treatment of the effect of turbulence on plume chemistry. In the plume-in-grid model presented here, the embedded reactive plume model combines a state-of-the-science puff model with a gas-phase chemistry mechanism that is consistent with that used in the host grid model. The puff model uses a second-order closure scheme, allowing for a more accurate treatment of dispersion and the influence of turbulent concentration fluctuations on chemical rates. It also allows the splitting and merging of puffs to account for wind shear effects, varying chemistry across the plume, and interplume and intraplume interactions. The combined puff/chemistry model is embedded into an Eulerian grid model. Results from the application of this model to the northeastern United States, a domain containing some of the largest NOx-emitting power plants in the United States, show that the plume-in-grid treatment leads to significant differences in surface O3 and HNO3 concentrations.