A replicating population of non-monocyte-derived free cells appears in organ-cultured embryonic rat lungs, indistinguishable from alveolar macrophages by classical criteria such as ultrastructure, lysosomal enzyme cytochemistry, and phagocytic behavior. We demonstrate similar events in cultured embryonic hamster lungs and development of macrophage-associated properties on the plasmalemma of these cells in both species. Immunoperoxidase localizations were obtained using monoclonal antibodies against alveolar macrophage antigen (HAM1) in hamsters, and rat macrophage antigen (ED1) and leukocyte-common antigen (OX1) in rats. Fc and C3b receptors were identified in both species by immune rosetting. HAM1 staining, perinuclear in rare cells at explantation, gains definitive surface localization 3-4 days later as cells prepare to emerge through the pleura. ED1 and OX1 cytoplasmic staining first occurs after 24 hr, increases as macrophages multiply and congregate beneath the pleura, and translocates to the plasmalemma of emerged cells. Some glass-adherent cells from lung explants have Fc receptors. The proportion rises sharply for 24 hr and equals fully emerged cells (90-95%) by days 3-4. At first phagocytosis is slow to follow Fc receptor binding, but ingestion time decreases to 3-10 min as macrophages mature. A minority of emerged macrophages bind complement-opsonized erythrocytes, which are rarely taken up. These properties are shared by alveolar macrophages of adults.