Surfactant protein C (SP-C) is a 3.7-kDa hydrophobic peptide isolated from organic extracts of pulmonary surfactant which is secreted by alveolar type II cells after synthesis and posttranslational processing of a 21-kDa proSP-C peptide (SP-C21). Previously characterized epitope-specific proSP-C antisera were used to study early proteolytic steps of proSP-C processing by adult rat type II cells. Western blotting and immunocytochemistry using anti-NPROSP-C (epitope = Met10-Glu23) each demonstrated marked attenuation of proSP-C protein expression by culture on plastic. Processing was therefore studied by metabolic labeling of freshly isolated type II cells maintained in suspension in serum-free media. With the use of anti-NPROSP-C, immunoprecipitation of cell lysates continuously labeled for 4 h with [35S]methionine demonstrated radiolabeled bands of M(r) 21, 16, and 10-6,000 while anti-CTERMSP-C (epitope = Ser149-Ser166) failed to detect 35S-bands of M(r) < 16,000. Pulse-chase studies demonstrated synthesis of 35S-proSP-C21 with a time-dependent dependent appearance of 16-kDa and 10- to 6-kDa forms which was blocked by addition of brefeldin A. SP-C precursors were not detected in the media. Quantitative analysis of the major bands by direct beta-counting indicated a precursor-product relationship between SP-C21 and SP-C16. These results demonstrate the utility of freshly isolated type II cells for characterization of SP-C synthetic pathways and show that early proSP-C processing events include synthesis of a 21-kDa primary translation product followed by extensive intracellular proteolysis of the proSP-C COOH-terminal in subcellular compartments of type II cells which are distal to the trans-Golgi network.