Isolated type II pneumocytes grown in serum on tissue culture-treated polycarbonate filters form monolayers with characteristic bioelectric properties, and change morphologically with time in culture to resemble type I cells. Concurrently, the cells express type I cell surface epitopes, making this a potentially useful in vitro model with which to study regulation of alveolar epithelial cell function and differentiation. To define specific soluble growth factors and matrix substances that may regulate these processes, it would be preferable to culture isolated pneumocytes de novo under completely defined, serum-free conditions. In this study, we developed a completely defined serum-free medium that is capable of supporting alveolar epithelial cells in primary culture, allowing the formation of monolayers with characteristic bioelectric and phenotypic properties. Freshly isolated rat type II cells were resuspended in completely defined serum-free medium and plated de novo on polycarbonate filters. Plating efficiency, bioelectric properties, morphology, and binding of a type I cell-specific monoclonal antibody were determined as functions of time. Plating efficiency plateaus at about 14% by Day 3 in culture. Transepithelial resistance rises to high levels, peaking at 1.76 +/- 0.14 K omega-cm2 by Day 5 in culture. Short-circuit current peaks on Day 3 in culture at 2.71 +/- 0.35 microA/cm2. With time, the cells gradually become flattened with protuberant nuclei and long cytoplasmic extensions, more closely resembling type I cells, and begin to express a type I cell surface epitope.(ABSTRACT TRUNCATED AT 250 WORDS)