Surfactant protein B (SP-B) mRNA and protein are restricted to alveolar Type II and Clara cells in the respiratory epithelium. In order to investigate the function of SP-B in these distinct cell types, transgenic mice were generated in which SP-B expression was selectively restored in Type II cells or Clara cells of SP-B -/- mice. The 4.8-kilobase murine SP-C promoter was used to generate 3 transgenic lines which expressed human SP-B in Type II cells (mSP-C/hSP-B). Likewise, the 2.3-kilobase murine CCSP promoter was used to generate two transgenic lines which expressed human SP-B in Clara cells (mCCSP/hSP-B). mSP-C/hSP-B and mCCSP/hSP-B transgenic mice were subsequently bred to SP-B +/- mice in order to selectively express SP-B in Type II cells or Clara cells of SP-B -/- mice. Selective restoration of SP-B expression in Type II cells completely rescued the neonatal lethal phenotype in SP-B -/- mice. Expression of SP-B in some, but not all Type II cells of SP-B -/- mice, allowed postnatal survival, but resulted in significantly altered lung architecture and function. Selective restoration of SP-B expression in Clara cells of SP-B -/- mice resulted in respiratory dysfunction and invariable neonatal death, related to the complete absence of mature SP-B peptide in these mice. These results indicate that expression and processing of the SP-B proprotein to the mature peptide in Type II cells is absolutely required for lung function in vivo and that SP-B expression in Clara cells cannot substitute for this function.