Surfactant content progressively increases in the lung lumen around the time of birth. During this same period, net production of lung liquid slows and reabsorption of liquid across the lung epithelium begins. To see if surfactant participates in the regulation of net production of lung liquid(Jv), we placed tracheal catheters in 9 fetal lambs (studied at 132 ± 2 d gestation; term 147 d) to measure Jv before and after surfactant (Infasurf, 350 mg) instillation into the lung lumen. We measured Jv by calculating changes in lung liquid volume over time as determined by the concentration of125 I-albumin placed into the lung lumen before each experiment. When we found that surfactant significantly decreased Jv (n=8, baseline: 12 ± 7; surfactant: 2 ± 9 ml/h; mean ± SD), we performed studies in which we measured Jv following the instillation of surfactant together with amiloride (≈10-4M), an inhibitor of transepithelial Na movement. Jv was significantly greater following the combination of surfactant and amiloride than after surfactant alone (n=8, baseline: 14 ± 7; amiloride/surfactant: 9 ± 7 ml/h), suggesting that enhanced Na reabsorption was in part responsible for the decrease in Jv after surfactant instillation. Because changes in lung liquid movement around the time of birth occur in association with increased Na-K-ATPase activity in distal lung epithelium, we studied fetal lamb distal lung epithelial cells in culture following acute surfactant exposure and assessed Na-K-ATPase activity by calculating the fraction of 86Rb (a K substitute) uptake that was inhibited by ouabain (10-4M). In 6 studies (passages 5-9), surfactant(160 μg/ml) increased ouabain-sensitive 86Rb uptake on average by 88% (control: 82 ± 29; surfactant: 132 ± 37 nmol/106 cells/h). These results suggest that surfactant slows net production of lung liquid by a mechanism involving Na transport and Na-K-ATPase. Thus, in addition to promoting alveolar stability, surfactant may help regulate water balance in the perinatal lung through an effect on lung epithelial ion transport. (Supported by NIH HL49098).