Organotypic cultures of fetal type II epithelial cells were incubated in media containing insulin at concentrations ranging from 10 to 400 microunits/ml. Exposure to insulin resulted in increased glucose uptake from the media and in the rate of glucose conversion to CO2. Furthermore, both glucose uptake and CO2 production were dependent on the glucose concentration in the media. Surfactant and residual phosphatidylcholine fractions were isolated from the organotypic cultures by sucrose density centrifugation. The presence of low doses of insulin (10-25 microunits/ml) caused a significant increase in the incorporation of glucose into both surfactant and residual phosphatidylcholine. Insulin at levels of 100 microunits/ml or higher resulted in a significant decrease in glucose incorporation into both phosphatidylcholine fractions. Increasing the media glucose concentration from 5.6 to 20 mM caused a 2- to 2.5-fold increase in glucose utilization for surfactant and residual phospholipid synthesis, but did not produce any significant changes in choline incorporation into either surfactant or residual phosphatidylcholine. The addition of 400 microunits/ml of insulin to media containing 20 mM glucose, however, resulted in a 20% decrease in choline incorporation into surfactant phosphatidylcholine but had no effect on choline incorporation into residual phosphatidylcholine. These results suggest that insulin is an important hormone regulating fetal lung maturation and that hyperinsulinemia may be responsible for the delayed lung development in infants of diabetic mothers.