Hydrophobic surfactant-associated protein of Mr 6000-14,000 was isolated from ether/ethanol or chloroform/methanol extracts of mammalian pulmonary surfactant. Automated Edman degradation in a gas-phase sequencer showed the major N-terminus of the human low molecular weight protein to be Phe-Pro-Ile-Pro-Leu-Pro-Tyr-Cys-Trp-Leu-Cys-Arg-Ala-Leu-. Because of the N-terminal phenylalanine, the surfactant protein was designated SPL(Phe). Antiserum generated against hydrophobic surfactant protein(s) from bovine pulmonary surfactant recognized protein of Mr 6000-14,000 in immunoblot analysis and was used to screen a lambda gt11 expression library constructed from adult human lung poly(A)+ RNA. This resulted in identification of a 1.4-kilobase cDNA clone that was shown to encode the N-terminus of the surfactant polypeptide SPL(Phe) (Phe-Pro-Ile-Pro-Leu-Pro-) within an open reading frame for a larger protein. Expression of a fused beta-galactosidase-SPL(Phe) gene in Escherichia coli yielded an immunoreactive Mr 34,000 fusion peptide. Hybrid-arrested translation with this cDNA and immunoprecipitation of [35S]methionine-labeled in vitro translation products of human poly(A)+ RNA with a surfactant polyclonal antibody resulted in identification of a Mr 40,000 precursor protein. Blot hybridization analysis of electrophoretically fractionated RNA from human lung detected a 2.0-kilobase RNA that was more abundant in adult lung than in fetal lung. The larger RNA and translation product indicates that SPL(Phe) is derived by proteolysis of a large polypeptide precursor. The amino acid sequence of the predicted protein, beginning Phe-Pro-Ile-Pro-Leu-Pro-Try-, comprises a hydrophobic peptide that is a major protein component of surfactant lipid extracts used successfully to treat hyaline membrane disease in newborn infants. These proteins, and specifically SPL(Phe), may therefore be useful for synthesis of replacement surfactants for treatment of hyaline membrane disease in newborn infants or of other surfactant-deficient states.