Explants prepared from the lung tissue of human abortuses of 20-22 weeks gestational age were incubated in defined medium without serum. These tissues developed the capacity for surfactant synthesis within 4 days. The ductular epithelium differentiated into type II pneumonocytes that contained numerous lamellar bodies. These morphological changes were accompanied by an increase in the rate of choline incorporation into phosphatidylcholine as well as an increase in the phosphatidylcholine content of the explants. Cortisol (0.2 micrograms/ml) plus PRL (2.5 micrograms/ml), when added to the medium from the beginning of the culture period, caused a 2- to 3-fold increase in the rate of choline incorporation into phosphatidylcholine, as measured on the second, fourth, sixth, and eighth days of incubation, as well as an increase in the phosphatidylcholine content of the explants. However, when administered alone, neither cortisol nor PRL affected phosphatidylcholine synthesis. In explants incubated with cortisol plus PRL there also was a stimulation of lamellar body secretion into the prealveolar ducts. The lamellar bodies in epithelial cells were larger in cortisol- plus PRL-treated tissue than those in nontreated tissues. Increases in phosphatidylcholine synthesis and lamellar body secretion also were observed in tissues incubated with insulin (2.5 micrograms/ml), cortisol, and PRL in combination or with insulin and cortisol in combination. The stimulatory effect of cortisol plus insulin on phosphatidylcholine synthesis, however, was significantly less than that of cortisol plus PRL or cortisol plus insulin plus PRL. It is suggested that human fetal lung development is under multihormonal control and that PRL and cortisol serve to increase surfactant synthesis and secretion.