Synthesis of surfactant in the lung of fetal, and perhaps adult, animals responds to glucorticoids, and glucocorticoid receptor activity has been identified in this tissue of several sepecies. To determine whether receptor is present in the alveolar type II cell, which is the site of surfactant production, we studied glucocorticoid binding by various populations of lung cells. Specific binding was demonstrated in freshly isolated populations of rat lung cells containing primarily alveolar type II cells, in organotypic cultures derived from fetal rat lung containing 90% type II cells, in cultured A549, L-2, and F-42 cell lines which apparently originated from type II cells, and in human lung fibroblastic cells. The equilibrium dissociation constants for nuclear binding of dexamethasone by intact cells at 37 C ranged from 5.0--10.8 nM, and the number of binding sites per cell ranged from 5,700--57,000. In cytosol preparations from L-2 and A549 cells, there was equivalent specific binding of both natural and synthetic corticosteroids, and binding activity had the expected specificity for steroids with glucocorticoid activity. These findings indicate that glucocorticoid receptor is present in both fetal and adult pulmonary type II cells and in cell lines which apparently originated from these cells. The presence of receptor in type II cells in consistent with direct action of glucocorticoids on these cells in vivo.