Previous investigations gained from in vivo or lung explant studies suggested that VEGF is an autocrine proliferation and maturation factor for developing alveolar type II cells. The objective of this work was to determine whether VEGF exerted its growth and maturation effects directly on isolated type II cells. These were isolated from 19-day fetal rat lung and cultured in defined medium. The presence of VEGF receptor-2 was assessed in cultured cells at the pre- and posttranslational levels. Recombinant VEGF(165), formerly found to be active on lung explants, failed to enhance type II cell proliferation estimated by thymidine and 5-bromo-2'-deoxy-uridine incorporation. It increased choline incorporation in saturated phosphatidylcholine by 27% but did not increase phospholipid surfactant pool size. VEGF (100 ng/ml) left unchanged the transcript level of surfactant proteins (SP)-A, SP-C, and SP-D but increased SP-B transcripts to four times the control steady-state level. VEGF slightly retarded, but did not prevent, the in vitro transdifferentiation of type II into type I cells, as assessed by immunolabeling of the type I cell marker T1alpha. We conclude that, with the exception of SP-B expression, which appears to be controlled directly, the previously observed effects of this VEGF isoform on type II cells are likely to be exerted indirectly through reciprocal paracrine interactions involving other lung cell types.