Oligohydramnios (OH) retards fetal lung growth by producing less lung distension than normal. To examine effects of decreased distension on fetal lung development, we produced OH in rats by puncture of uterus and fetal membranes at 16 days of gestation; fetuses were delivered at 21 or 22 days of gestation. Controls were position-matched littermates in the opposite uterine horn. OH lungs had lower weights and less DNA, protein, and water, but no differences in saturated phosphatidylcholine, surfactant proteins (SP)-A and -B, and mRNA for SP-A, -B, -C, and -D. To evaluate effects on epithelial differentiation, we used RTI(40) and RTII(70), proteins specific in lung to luminal surfaces of alveolar type I and II cells, respectively. At 22 days of gestation, OH lungs had less RTI(40) mRNA (P < 0.05) and protein (P < 0.001), but RTII(70) did not differ from controls. With OH, type I cells (in proportion to type II cells) covered less distal air space perimeter (P < 0.01). We conclude that OH, which retards lung growth, has little effect on surfactant and impedes formation of type I cells relative to type II cells.