Native lung surfactant protein C (SP-C) is a 4.2-kDa acylpeptide that associates with alveolar surfactant phospholipids via a transmembrane alpha-helix. This helix contains mainly Val, although poly-Val is inefficient in helix formation, and helical SP-C can spontaneously convert to beta-sheet aggregates and amyloid-like fibrils. SP-C is cleaved out from a 21-kDa integral membrane protein, proSP-C, in the alveolar type II cell. Recently several mutations localized in the endoplasmic reticulum-lumenal (C-terminal) part of proSP-C (CTproSP-C) have been associated with intracellular accumulation of toxic forms of proSP-C, low levels of mature SP-C, and development of interstitial lung disease. CTproSP-C contains a approximately 100-residue Brichos domain of unknown function that is also found in other membrane proteins associated with amyloid formation, dementia, and cancer. Here we find that recombinant CTproSP-C binds lipid-associated SP-C, which is in beta-strand conformation, and that this interaction results in an increased helical content. In contrast, CTproSP-C does not bind alpha-helical SP-C. Recombinant CTproSP-C(L188Q), a mutation associated with interstitial lung disease, shows secondary and quaternary structures similar to those of wild type CTproSP-C but is unable to bind lipid-associated beta-strand SP-C. Transfection of CTproSP-C into HEK293 cells that express proSP-C(L188Q) increases the amount of proSP-C protein, whereas no effect is seen on cells expressing wild type proSP-C. These findings suggest that CTproSP-C binds nonhelical SP-C and thereby prevents beta-sheet aggregation and that mutations in CTproSP-C can interfere with this function.