The first successful clinical pilot studies of surfactant replacement were published about 20 years ago as a logical extension of experimental studies showing beneficial effects in pre-term animals. The efficacy of this therapy for immature new-borns has been confirmed in various controlled trials and surfactant therapy is now part of the routine management of the infant respiratory distress syndrome. During the last decade there has been growing insight into the functional role of surfactant components and the mechanisms by which exogenous surfactant exerts its therapeutic effects on lung mechanics, gas exchange and host defence. Of particular interest in this context is the essential role that surfactant-associated proteins play in the surface tension-limiting ability of surfactant, as well as their contribution to pulmonary defence. Indications for surfactant replacement have widened in recent years and promising results have been obtained for adult conditions such as the acute respiratory distress syndrome (ARDS), pneumonia, chronic obstructive and allergic lung diseases. This review outlines the complexity of the surfactant system and describes its basic biophysics, physiology and biochemistry. Problems related to the development of exogenous surfactant preparations, the exploration of clinical targets for surfactant therapy and pathophysiological mechanisms interfering with surfactant function in various forms of lung disease will be discussed.