Alveolar type II (ATII) cells, are often exposed to increased concentration of endogenous and exogenous nitric oxide (·NO). Exposure of freshly isolated rat ATII cells for 2 h to 1-3 μM ·NO, generated by S- nitroso-N-penicillamine (SNAP), spermine NONOate, or 3-morpholino-sydnonimine (SIN-1) in the presence of superoxide dismutase, resulted in ~60% decrease in the rate of surfactant synthesis, as measured by the rate of incorporation of [methyl3H]choline into phosphatidylcholine, and 60-80% inhibition of cellular ATP levels, as determined by bioluminescence. Similar results were obtained after incubation of ATII cells with authentic peroxynitrite (0.5 mM) but not SIN-1, a putative generator of peroxynitrite. Addition into the medium of oxyhemoglobin (20 ♂M), which scavenged ·NO, or enhancement of ATII glutathione levels by preincubation with glutathione ester (5 mM) totally prevented the NONOate (100 μM) inhibition of cellular ATP. In contrast to the in vitro findings, normal levels of ATP and lipid synthesis were measured in ATII cells isolated from the lungs of rats that breathed ·NO gas (80 ppm) in 21% O2 for 2 h (n = 4). This lack of effect may be due either to the presence of various antioxidants (such as glutathione) in the epithelial lining fluid or to the relatively low concentrations of ·NO reaching the alveolar epithelium. We conclude that ·NO and peroxynitrite, at concentrations likely to be encountered in vivo during inflammation, decrease ATII cell energy stores and surfactant synthesis, which may lead to derangement of important physiological functions.