Targeted deletion of the surfactant protein (SP)-B locus in mice causes lethal neonatal respiratory distress. To assess the importance of SP-B for postnatal lung function, compound transgenic mice were generated in which the mouse SP-B cDNA was conditionally expressed under control of exogenous doxycycline in SP-B^-/- mice. Doxycycline-regulated expression of SP-B fully corrected lung function in compound SP-B^-/- mice and protected mice from respiratory failure at birth. Withdrawal of doxycycline from adult compound SP-B^-/- mice resulted in decreased alveolar content of SP-B, causing respiratory failure when SP-B concentration was reduced to <25% of normal levels. Decreased SP-B was associated with low alveolar content of phosphatidylglycerol, accumulation of misprocessed SP-C proprotein in the air spaces, increased protein content in bronchoalveolar lavage fluid, and altered surfactant activity in vitro. Consistent with surfactant dysfunction, hysteresis, maximal tidal volumes, and end expiratory volumes were decreased. Reduction of alveolar SP-B content causes surfactant dysfunction and respiratory failure, indicating that SP-B is required for postnatal lung function.