Basal lung expansion is an important determinant of alveolar epithelial cell (AEC) phenotype in the fetus. Because basal lung expansion increases toward term and is reduced after birth, we hypothesized that these changes would be associated with altered proportions of AECs. AEC proportions were calculated with electron microscopy in fetal and postnatal sheep. Type I AECs increased from 4.8 +/- 1.3% at 91 days to 63.0 +/- 3.6% at 111 days of gestation, remained at this level until term, and decreased to 44.8 +/- 1.8% after birth. Type II AECs increased from 4.3 +/- 1.5% at 111 days to 29.6 +/- 4.1% at 128 days of gestation, remained at this level until term, and then increased to 52.9 +/- 1.5% after birth. Surfactant protein (SP)-A, -B and -C mRNA levels increased with increasing gestational age before birth, but the changes in SP expression after birth were inconsistent. Thus before birth type I AECs predominate, whereas after birth type II AECs predominate, possibly due to the reduction in basal lung expansion associated with the entry of air into the lungs.