Although the lung is protected by classic innate and adaptive immune mechanisms, another unique local immunoregulatory system involving pulmonary surfactant is described in this review. Normal surfactant inhibits many immune cell functions including proliferation resulting from various stimuli and production of reactive oxidants, inflammatory mediators, and some cell surface markers. The predominant surfactant lipids appear to be responsible for these suppressive effects. Conversely, surfactant proteins SP-A and SP-D stimulate many aspects of immune cell behavior. These proteins are collagenous lectins or collectins that bind to glycoconjugates on many pathogens, enhancing phagocytosis and killing in some cases. SP-A and SP-D stimulate chemotaxis and reactive oxidant generation, particularly in macrophages, although other cells are probably affected as well. In some cases, SP-A also stimulates the expression of cell surface markers and is involved in the stimulation of inflammatory mediators. Under normal conditions, the inhibitory effects of the lipid prevail, but the collectins may provide focal activation and stimulate immune cells at sites where they are needed. However, in some types of lung disease or after certain insults or exposures, the balance between these inhibitory and stimulatory influences may be disrupted and result in inflammatory injury.