Extracellular matrix (ECM) deposition by alveolar type II cells is important for repair of a damaged alveolar epithelium. Transforming growth factor-beta (TGF-beta) is abundant in injured lung and has profound effects on ECM production and cell differentiation. We determined the effects of TGF-beta 1 on type II cell expression of fibronectin and surfactant protein C (SP-C) in vitro. TGF-beta 1 increased the proportion of type II cells with detectable mRNA for fibronectin from 9 to 68%, as demonstrated by in situ hybridization, and increased the fibronectin mRNA levels 10-fold. TGF-beta 1-treated cultures had increased immunostaining for fibronectin and increased secretion of metabolically labeled fibronectin. A decreased proportion of type II cells treated with TGF-beta 1 had detectable mRNA for SP-C, and the abundance of this message per cell decreased to 25% of control values. No effects of TGF-beta 1 were noted on the proportion of cells that contained lamellar bodies, which was 87% in both groups. These data indicate that TGF-beta 1 regulates type II cell fibronectin protein an mRNA levels. In addition, the decreased abundance of SP-C mRNA suggests that TGF-beta 1 may also modulate type II cell differentiation in lung injury.