The adult alveolar epithelium consists of type I and type II (ATII) pneumocytes that form a tight barrier, which severely restricts the entry of lipid-insoluble molecules from the interstitial to the alveolar space. Current in vivo and in vitro evidence indicates that the alveolar epithelium is also an absorptive epithelium, capable of transporting Na+ from the alveolar lumen, which is bathed by a small amount of epithelial lining fluid, to the interstitial space. The in situ localization of Na+-K+-ATPase activity in ATII cells and the fact that these cells are involved in a number of crucial functions, such as surfactant secretion and alveolar remodeling after injury, led investigators to examine their transport characteristics. Radioactive flux studies, in both freshly isolated and cultured cells, and bioelectric measurements in ATII cells grown on porous supports indicate that they transport Na+ according to the Koefoed-Johnsen and Ussing model of epithelial transport. Na+ enters the apical membrane, because of the favorable electrochemical gradient, through Na+ cotransporters, a Na+-H+ antiport, and cation channels and is pumped across the basolateral membrane by a ouabain-sensitive Na+-K+ pump. Na+ transport is enhanced by substances that increase intracellular adenosine 3',5'-cyclic monophosphate. In addition to Na+ transporters, ATII cells contain several transporters that regulate their intracellular pH, including a H+-ATPase, which may explain the low pH of the epithelial lining fluid. The absorptive properties of ATII cells may play an important role in regulating the degree of alveolar fluid in health and disease.