Neonatal respiratory distress syndrome (RDS) caused by surfactant deficiency is a common disorder in premature infants. Exogenous surfactant therapy improves survival in infants with RDS. However, the phospholipid component of the surfactant has been suggested to be inactivated by a phospholipid hydrolyzing enzyme, phospholipase A2 (PLA2). Although alveolar type II cells produce the surfactant, it is not known whether these cells have any mechanism to protect surfactant from PLA2 hydrolysis. Since alveolar Clara cells express uteroglobin (UG), a PLA2 inhibitory and antiinflammatory protein, and since it has been suggested that alveolar type II cells are derived from Clara cells, we sought to elucidate whether type II cells are also capable of expressing UG gene. By using radioimmunoassay, immunoprecipitation and Western blotting techniques we demonstrate for the first time that type II cells, isolated from mature rabbit lungs, synthesize and secrete UG. The transcription of the UG gene was detected by in situ hybridization using rabbit UG cDNA probe. These results imply that UG, synthesized by type II cells, may protect both endogenous and exogenous surfactant from PLA2 hydrolysis. Moreover, the antiinflammatory properties of UG may prevent the development of chronic inflammatory lung disease, a frequent complication of RDS.