The cellular localization, functional activities and structures of rat and human Clara cell 10 kDa proteins (CC10) are compared to rabbit uteroglobin. CC10 is present exclusively in the non-ciliated cells of the surface epithelium of the pulmonary airways, whereas uteroglobin is reported to be present in the lung and reproductive organs. There is about 55% identity between the amino acid sequences of rat CC10 and either rabbit uteroglobin or human CC10. The latter two have 61% identity. Using the known structure of uteroglobin as the model, correlations between the structure and function for this group of proteins are made. Substitution of the residues for the rat and human CC10 into the structure of uteroglobin suggests that these proteins may be members of a structurally homologous family. Some of the functional differences may be due to distortion of the hydrophobic pocket in the dimeric protein and a surface hypervariability located on one contiguous helix and beta turn. Rat CC10 and rabbit uteroglobin both, nearly equally, inhibit papain and bind progesterone. Human CC10 does not inhibit papain and has markedly lower progesterone binding (4.6% of rabbit uteroglobin). Antiinflammatory activity of synthetic peptides corresponding to a homologous sequence region of uteroglobin and the two Clara cell proteins was tested. The region chosen has sequence similarity to lipocortin I. The peptides not only failed to inhibit carrageenan-induced foot pad swelling but exacerbated it. All three proteins inhibit pancreatic phospholipase A2. The phospholipase A2 inhibitory effect of CC10 may be important in regulating the inflammatory responses in the lung.