Studies of the regulation of surfactant lipoprotein metabolism and secretion and surfactant protein gene expression have been hampered by the lack of a cell culture system in which the phenotypic properties of type II cells are maintained. We have developed a primary culture system that facilitates the maintenance of a number of morphologic and biochemical properties of type II pneumonocytes for up to 2 wk. Cells were isolated by collagenase digestion of midgestation human fetal lung tissue that had been maintained in organ culture in the presence of dibutyryl cyclic AMP (Bt₂cAMP) for 5 days. The isolated cells were enriched for epithelial components by treatment with DEAE-dextran, plated on an extracellular matrix (ECM) derived from Madin-Darby canine kidney (MDCK) cells, and incubated at an air/liquid interface in a minimal amount of culture medium containing Bt₂cAMP. The cell cultures were comprised of islands of round epithelial-like cells containing numerous dense osmiophilic granules, surrounded by sparse spindle-shaped cells with the appearance of fibroblasts. Ultrastructural examination revealed that the osmiophilic granules had the appearance of lamellar bodies, the distinguishing feature of type II pneumonocytes. Additionally, the cultures maintained elevated levels of SP-A gene expression for up to 2 wk. The expression of mRNAs encoding SP-A, SP-B, and SP-C were regulated in the cultured cells by glucocorticoids and cyclic AMP in a manner similar to that observed in fetal lung tissue in organ culture. The differentiated phenotype was most apparent when the cells were cultured at an air/liquid interface. In order to utilize the cultured type II cells for study of the effects of overexpression of various proteins and for promoter analysis, it is of essence to transfect DNA constructs into these cells with high efficiency. Unfortunately, we found the cells to be refractory to efficient transfer of DNA using conventional methods (i.e., lipofection, electroporation, or calcium phosphate-mediated transfection). However, replication-defective recombinant human adenoviruses were found to provide a highly efficient means of introducing DNA into the type II pneumonocytes. Furthermore, we observed in type II cell-enriched cultures infected with recombinant adenoviruses containing the lacZ gene under control of a cytomegalovirus promoter, that β-galactosidase was expressed uniformly in the islands of type II cells and surrounding fibroblasts. By contrast, in cultures infected with recombinant adenoviruses containing the human growth hormone (hGH) gene under control of the SP-A gene promoter and 5′-flanking region, hGH was expressed only in the type II cells. Thus, this culture system provides an excellent means for identifying genomic elements that mediate type II cell-specific gene expression.