Studies of secretion of surfactant proteins by alveolar type II cells have been limited because the expression of the genes for these proteins decreases rapidly in primary culture. We developed a culture system to investigate the regulation of lipid and protein secretion by alveolar type II cells and the genes involved in these processes. Rat type II cells were plated on membrane inserts coated with rat-tail collagen in medium containing 10% fetal bovine serum (FBS) for 1 d before being changed to medium containing 5 ng/ml keratinocyte growth factor (KGF) and 2% serum for 3 d and to medium with 5% Engelbreth–Holm–Swarm tumor matrix (EHS) but without serum for 2 d. From this time forward, the cells were placed on a rocking platform and cultured with 0.4 ml medium on the apical surface at the air–liquid interface (A/L) in four different, serum-free media: basal Dulbecco's modified Eagle's medium (DMEM)/F12 medium (DF12), basal medium plus EHS (DF12/EHS), basal medium plus KGF (DF12/KGF), and basal medium plus EHS and KGF (DF12/EHS/KGF). Cells cultured in DF12 and DF12/EHS assumed an attenuated, flattened morphology, whereas those in DF12/KGF and DF12/EHS/KGF were more cuboidal, contained numerous lamellar bodies, and had apical microvilli. Cells cultured in DF12 and DF12/EHS produced a relatively weak signal for the surfactant protein mRNAs (surfactant proteins [SP]-A, SP-B, SP-C, and SP-D, respectively), and secretion of SP-A and SP-D remained low. In contrast, cells maintained for 3 d at A/L and cultured in the presence of KGF showed strong signals for SP-A, SP-B, and SP-D mRNAs, and secreted SP-A, SP-D, and lysozyme into the apical medium. The combination of 12-O-tetradecanoyl-phorbol-11-acetate (TPA) and terbutaline stimulated secretion of [³H]phosphatidylcholine ([³H]PC), SP-A, and lysozyme, but not SP-D. This primary culture system should prove useful for mechanistic studies of the secretion of SP-A, SP-D, and surfactant lipids.