A prominent membrane protein of rat type II alveolar cells, p146, was originally identified by one of many mouse monoclonal antibodies that were produced to rat lung cells in the course of a search for differentiation antigens that might prove useful in studying lung differentiation. We report here results from analysis of the primary structure of this molecule and, based on this knowledge, the elucidation of the function of the protein. Amino acid sequencing of the NH2-terminal portion of the p146 protein, plus partial sequencing of several peptides obtained by limited proteolysis, indicates it is identical to aminopeptidase N. Further, the immunoaffinity purified p146 protein has aminopeptidase N activity. The discussion includes references to other molecules such as CD 13 and CD 10 (CALLA) that were recognized as differentiation antigens and subsequently found to be peptidases. The possible biological implications of such a peptidase on the luminal surface of type II alveolar cells are also considered.