Localization of surfactant phospholipid clearance in lung cells was investigated in vivo in rabbits using radiolabeled dipalmitoylphosphatidylcholine (DPPC) and 1,2-dihexa-decyl-sn-glycero-3-phosphocholine (DPPC-ether), a phospholipase A1- and A2-resistant analogue of DPPC. After intratracheal injection of liposomes of the labeled lipids associated with unlabeled surfactant, adult rabbits were killed in groups of three to five at 0, 4, 12, and 24 h with recovery of bronchoalveolar lavages for alveolar macrophages and surfactant. Type II cells and tissue-associated macrophages were isolated on Percoll gradients following elastase and trypsin digestion of the lungs. Radiolabel recoveries as saturated phosphatidylcholine were measured in alveolar wash, alveolar macrophages, lung tissue, and the type II cell and mixed cell bands from the Percoll gradients. Cost accounting of label demonstrated similar recoveries at 0 h, but significantly more DPPC-ether compared with DPPC in cells at later times, indicating ineffective degradation of the DPPC-ether. Internalization of the lung tissue-associated labels into cells was time dependent. At all times, greater than 65% of the cell-associated labels were recovered in type II cells, indicating the primary role for these cells in clearing alveolar surfactant phospholipid in vivo. The total contribution of alveolar macrophages to the overall clearance was approximately 20%.