Type II cell enriched fractions were isolated from rabbit and rat lungs using density gradient centrifugation. Cultures established from these fractions contained predominantly cells similar in most morphological respects to type II pneumocytes. These were in continuous replicating culture for 1 year and still exhibited contact inhibition. Membrane-bound structures reminiscent of, but no longer strictly identical to, type II cell lamellar cytosomes were seen in cells from these long-term cultures although their numbers were reduced in comparison to lamellar bodies in freshly isolated cells. Mitochondrial numbers and sizes, determined morphometrically, were reduced after culture in comparison to freshly isolated type II cells and those in situ. Phosphatidylcholine was synthesized by these cells and released into the extracellular medium. Application of laser activated electronic sizing data, confirmed by direct micrometry, demonstrated a significant increase in cell size as a function of culture. This sizing data, after prior confirmation by electron microscopy, was used as an aid in identifying type II cells and macrophages in dispersion, especially with those cells derived from rabbit lungs.