Although approximately 98% of the internal surface area of the lung is lined by alveolar type I cells, little is known about the functions of this cell type. Using freshly isolated rat type I and type II cells, we created a subtraction library by suppression subtractive hybridization to identify genes differentially expressed by type I cells. We identified twelve genes of known function that are differentially expressed by type I cells. Differential expression of all 12 genes was confirmed by Northern blotting; we confirmed differential expression by immunocytochemistry for 3 genes for which suitable antibodies were available. Most of the genes code for proteins that are multifunctional. From the known functions of these genes, we infer that type I cells may play a role in the maintenance of normal alveolar homeostasis and protection from injury, lung development and remodeling, host defense, tumor/growth suppression, and surfactant metabolism, among other functions.