We developed methodology to isolate and culture rat alveolar Type II cells under conditions that preserved their proliferative capacity, and applied lipofection to introduce an immortalizing gene into the cells. Briefly, the alveolar Type II cells were isolated from male F344 rats using airway perfusion with a pronase solution followed by incubation for 30 min at 37 degrees C. Cells obtained by pronase digestion were predominantly epithelial in morphology and were positive for Papanicolaou and alkaline phosphatase staining. These cells could be maintained on an extracellular matrix of fibronectin and Type IV collagen in a low serum, insulin-supplemented Ham's F12 growth medium for four to five passages. Rat alveolar epithelial cells obtained by this method were transformed with the SV40-T antigen gene and two immortalized cell lines (RLE-6T and RLE-6TN) were obtained. The RLE-6T line exhibits positive nuclear immunostaining for the SV40-T antigen and the RLE-6TN line does not. PCR analysis of genomic DNA from the RLE-6T and RLE-6TN cells demonstrated the T-antigen gene was present only in the RLE-6T line indicating the RLE-6TN line is likely derived from a spontaneous transformant. After more than 50 population doublings, the RLE-6T cells stained positive for cytokeratin, possessed alkaline phosphatase activity, and contained lipid-containing inclusion bodies (phosphine 3R staining); all characteristics of alveolar Type II cells. The RLE-6TN cells exhibited similar characteristics except they did not express alkaline phosphatase activity. Early passage RLE-6T and 6TN cells showed a near diploid chromosome number.(ABSTRACT TRUNCATED AT 250 WORDS)