Allergen challenge in the lung of humans and animals is associated with surfactant dysfunction, but the mechanism of this effect has not been established. By using a murine model of asthma we now report the effect of allergen-induced airway inflammation on the expression of transgenes regulated by the human surfactant protein (hSP)-C promoter. The hSP-C 3.7-kilobase pair promoter was used to direct the expression of eotaxin, an eosinophil-selective chemokine, into the lungs of several transgenic lines. As expected, the transgenic mice expressed increased amounts of eotaxin mRNA and protein compared with wild-type mice. Surprisingly, following allergen challenge, there was a marked down-regulation of transgene mRNA in three independent transgenic lines. The down-regulation was in contrast to other related proteins such as endogenous eotaxin and surfactant protein D levels, which were both increased following allergen challenge. Consistent with specific down-regulation of the eotaxin transgene, there was no increase in pulmonary eosinophil levels in the transgenic mice above that found in wild-type mice. Analysis of hSP-C transgenic mice with distinct reporter genes and 3'-untranslated regions revealed that allergen challenge was directly affecting the hSP-C promoter. We hypothesized that allergen-induced down-regulation of the hSP-C promoter was related to the eosinophilic inflammation. To test this, we blocked eosinophilic inflammation in the lungs by treating mice with neutralizing antiserum against interleukin-5. Interestingly, this treatment also blocked allergen-induced inhibition of the hSP-C promoter. These results establish that allergic airway inflammation is associated with up-regulation of the surfactant proteins primarily involved in immunity, whereas down-regulation of the surfactant protein primarily involved in maintaining airway patency. Furthermore, the marked down-regulation of the hSP-C promoter is interleukin-5-dependent, implying a critical role for eosinophilic inflammation. These results suggest that alterations in surfactant protein levels may contribute to immune and airway dysfunction in asthma.