A deficiency in alveolar surfactant due to immaturity of alveolar type II epithelial cells causes respiratory distress syndrome (RDS). In contrast to animals, the fetal maturation of surfactant in human lungs takes place before term, exceptionally large quantities of surfactant accumulating in the amniotic fluid. The antenatal development of surfactant secretion is very variable but corresponds closely to the risk of RDS. The variation in SP-A and SP-B genes, race, sex and perinatal complications influence susceptibility to RDS. Surfactant therapy has improved the prognosis of RDS remarkably. Abnormalities in alveolar or airway surfactant characterize many lung and airway diseases. In the acute respiratory distress syndrome, deficiencies in surfactant components (phospholipids, SP-B, SP-A) are evident, and may be caused by pro-inflammatory cytokines (IL-1, TNF) that decrease surfactant components. The resultant atelectasis localizes the disease, possibly allowing healing (regeneration, increase in surfactant). In the immature fetus, cytokines accelerate the differentiation of surfactant, preventing RDS. After birth, however, persistent inflammation is associated with low SP-A and chronic lung disease. A future challenge is to understand how to inhibit or redirect the inflammatory response from tissue destruction and poor growth towards normal lung development and regeneration.