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Alveolar type II cells were isolated from fetal mouse lung by differential adherence and obtained in monolayer culture. Cultures display a high degree of purity as shown by histochemical and immunocytochemical staining procedures. Seventy-five percent of cells stained positive with specific anti-lavage serum mouse (SALS-M), an antiserum specific for (pre)alveolar type II cells of the mouse, and osmiophilic bodies were present in 82% of cells. These and other characteristics of type II cells in culture correspond to those of alveolar type II cells in fetal mouse lung. The pattern of reactivity of these cells with various anti-cytokeratin antibodies is described, and we show that, in contrast to rat type II cells, they do not exhibit alkaline phosphatase activity. Identity of the type II cell cultures was shown by their specific phospholipid composition and surfactant protein A (SP-A) content. The fetal alveolar type II cells in culture were found to synthesize and express class I but not class II major histocompatibility complex (MHC) antigens. The possibility to culture fetal alveolar type II cells of the mouse and the availability of genetically well-defined inbred and transgenic mouse strains opens ways to study the genetics of type II cell differentiation and function. Also, the in vitro availability of alveolar type II cells, the progenitor cells of mouse lung tumors, will enable us to study in vitro several of the processes involved in lung tumorigenesis in the mouse.