Mutations in ATP-binding cassette transporter A3 (human ABCA3) protein are associated with fatal respiratory distress syndrome in newborns. We therefore characterized mice with targeted disruption of the ABCA3 gene. Homozygous Abca3-/- knock-out mice died soon after birth, whereas most of the wild type, Abca3+/+, and heterozygous, Abca3+/-, neonates survived. The lungs from E18.5 and E19.5 Abca3-/- mice were less mature than wild type. Alveolar type 2 cells from Abca3-/- embryos contained no lamellar bodies, and expression of mature SP-B protein was disrupted when compared with the normal lung surfactant system of wild type embryos. Small structural and functional differences in the surfactant system were seen in adult Abca3+/- compared with Abca3+/+ mice. The heterozygotes had fewer lamellar bodies, and the incorporation of radiolabeled substrates into newly synthesized disaturated phosphatidylcholine, phosphatidylglycerol, phosphatidylethanolamine, and phosphatidylserine in both lamellar bodies and surfactant was lower than in Abca3+/+ mouse lungs. In addition, since the fraction of near term Abca3-/- embryos was significantly lower than expected from Mendelian inheritance ABCA3 probably plays roles in development unrelated to surfactant. Collectively, these findings strongly suggest that ABCA3 is necessary for lamellar body biogenesis, surfactant protein-B processing, and lung development late in gestation.