Active ion transport by basolateral Na-K-ATPase (Na pump) creates an Na+ gradient that drives fluid absorption across lung alveolar epithelium. The α1 and β1 subunits are the most highly expressed Na pump subunits in alveolar epithelial cells (AEC). The specific contribution of the β1 subunit and the relative contributions of alveolar epithelial type II (AT2) versus type I (AT1) cells to alveolar fluid clearance (AFC) were investigated using two cell type-specific mouse knockout lines in which the β1 subunit was knocked out in either AT1 cells or both AT1 and AT2 cells. AFC was markedly decreased in both knockout lines, revealing, we believe for the first time, that AT1 cells play a major role in AFC and providing insights into AEC-specific roles in alveolar homeostasis. AEC monolayers derived from knockout mice demonstrated decreased short-circuit current and active Na+ absorption, consistent with in vivo observations. Neither hyperoxia nor ventilator-induced lung injury increased wet-to-dry lung weight ratios in knockout lungs relative to control lungs. Knockout mice showed increases in Na pump β3 subunit expression and β2-adrenergic receptor expression. These results demonstrate a crucial role for the Na pump β1 subunit in alveolar ion and fluid transport and indicate that both AT1 and AT2 cells make major contributions to these processes and to AFC. Furthermore, they support the feasibility of a general approach to altering alveolar epithelial function in a cell-specific manner that allows direct insights into AT1 versus AT2 cell-specific roles in the lung.