Surfactant protein B (SP-B)1 is a critical component of pulmonary surfactant, a lipid-protein mixture which forms a film along the surface of the alveolar epithelium, and is absolutely required for maintenance of alveolar stability at low lung volumes. Surfactant phospholipid mixtures lacking the hydrophobic proteins SP-B and SP-C have poor surface film forming properties, whereas surfactants containing SP-B as the sole protein component rapidly form a stable phospholipid film in vitro and restore lung function in surfactant-deficient preterm animals (1-3). Genetic ablation of the murine SP-B locus leads to acute respiratory distress syndrome at birth resulting in death within minutes (4). Likewise, mutations resulting in SP-B deficiency in human infants lead to severe respiratory distress and death in the neonatal period (5, 6). Intratracheal administration of exogenous SP-B to infants with hereditary SP-B deficiency failed to restore lung function, suggesting that SP-B may have functions in addition to promoting formation of a stable surface film in the alveolus (7). Consistent with this hypothesis, SP-B deficiency in mice and human infants was associated with failure to form lamellar bodies and altered pro-SP-C processing (4, 8).Expression of SP-B is restricted to alveolar Type II cells and nonciliated bronchiolar epithelial (Clara) cells of the pulmonary epithelium (9, 10). In Type II cells, proteolytic processing of the SP-B proprotein is initiated in the multivesicular body with cleavage of an NH 2 -terminal propeptide to generate a processing intermediate of 25 kDa (11,12). Subsequent cleavage of a COOH-terminal propeptide results in liberation of the hydrophobic mature peptide which forms homodimers of 18 kDa. Mature SP-B is stored with surfactant phospholipids in lamellar bodies, the contents of which are released into the alveolar airspace via basal and stimulus-induced secretion (reviewed in (13)).In contrast to the well characterized SP-B biosynthetic pathway in Type II cells, little is known about synthesis and processing of SP-B in Clara cells. Technical problems in the isolation of pure populations of these cells has made study of SP-B processing by Clara cells difficult. Clara cells are the most abundant cell type within the conducting airways of the murine lung, comprising more than 50% of the epithelial cells lining the terminal bronchioles (14,15). Expression of SP-B in cells at the terminal airway/alveolar junction suggests that under certain circumstances, Clara cells may contribute SP-B to the alveolar surfactant pool. In addition to a putative alveolar surfactant function, Clara cell SP-B may also promote formation of a surfactant film in the terminal bronchioles which may be important for maintaining the patency of small conducting airways. Finally, given the widespread distribution of Clara cells in the murine airway, it is possible that SP-B has function(s) that are independent of surfactant activity. In order to better understand the role of SP-B in Type II cells and Clara cells, we ha...