Exposing bovine lipid extract surfactant (BLES), a clinical surfactant, to reactive oxygen species arising from hypochlorous acid or the Fenton reaction resulted in an increase in lipid (conjugated dienes, lipid aldehydes) and protein (carbonyls) oxidation products and a reduction in surface activity. Experiments where oxidized phospholipids (PL) were mixed with BLES demonstrated that this addition hampered BLES biophysical activity. However the effects were only moderately greater than with control PL. These results imply a critical role for protein oxidation. BLES oxidation by either method resulted in alterations in surfactant proteins SP-B and SP-C, as evidenced by altered Coomassie blue and silver staining. Western blot analyses showed depressed reactivity with specific antibodies. Oxidized SP-C showed decreased palmitoylation. Reconstitution experiments employing PL, SP-B, and SP-C isolated from control or oxidized BLES demonstrated that protein oxidation was more deleterious than lipid oxidation. Furthermore, addition of control SP-B can improve samples containing oxidized SP-C, but not vice versa. We conclude that surfactant oxidation arising from reactive oxygen species generated by air pollution or leukocytes interferes with surfactant function through oxidation of surfactant PL and proteins, but that protein oxidation, in particular SP-B modification, produces the major deleterious effects.