Surfactant-associated protein of Mr 28,000 to 35,000 (SAP-35) is an abundant glycoprotein present in the alveolus of the lung, which imparts both structural organization to surfactant phospholipids and provides regulatory information controlling surfactant phospholipid secretion and metabolism. SAP-35 expression is enhanced by 3'-5'-cyclic adenosine monophosphate and epidermal growth factor during perinatal differentiation of type II epithelial cells. Its synthesis and RNA are also controlled by a variety of inhibitory factors, which include transforming growth factor and insulin. Glucocorticoids both enhance and inhibit SAP-35 expression in fetal lung explants. There is evidence that fetal hyperinsulinemia or hyperglycemia, or both, inhibit the morphologic differentiation of the type II epithelial cell in association with decreased phospholipid surfactant synthesis or secretion. Insulin is also a potent inhibitor of SAP-35 expression in fetal lung tissue, and decreased SAP-35 was previously noted in amniotic fluid of patients with diabetes during pregnancy. Recent progress in the management of diabetes in pregnancy, characterized by more rigorous metabolic control, has decreased the risk of hyaline membrane disease for the infant of the diabetic mother and is associated with normal levels of SAP-35 in amniotic fluid. Hyaline membrane disease remains a major cause of morbidity in infants of diabetic mothers but may also reflect a higher incidence of premature delivery, cesarean section, and asphyxia at delivery as well as inhibition of pulmonary surfactant phospholipid synthesis or expression of the surfactant protein SAP-35.