We evaluated the effects of epidermal growth factor (EGF) on transepithelial resistance (Rt) and active ion transport by alveolar epithelial cell (AEC) monolayers on tissue culture-treated polycarbonate filters. Rat type II cells were cultured in completely defined serum-free medium (MDSF) or MDSF supplemented with EGF. The addition of EGF from either day 0 (chronic) or day 4 (subacute) resulted in significant increases in Rt and short-circuit current (ISC) on day 5. After subacute exposure, these effects were delayed in onset by 6-12 h and sustained for > 24 h. Basolateral (but not apical) EGF was responsible for these effects, which were prevented by preincubation with tyrphostin RG-50864, a reversible specific inhibitor of the EGF receptor tyrosine kinase. ISC decreased, with a sensitivity to apical inhibitors of sodium transport in the order benzamil > amiloride > 5-(N-ethyl-N-isopropyl) amiloride in MDSF +/- EGF, and was completely inhibited by the addition of basolateral ouabain. Net sodium flux and Na+, K+ -ATPase activity both increased approximately 50% in the presence of EGF. These results indicate that 1) EGF decreases tight junctional permeability and increases active sodium transport by AEC monolayers via basolaterally located EGF receptors, and 2) the pathways for AEC sodium entry and exit (+/- EGF) are apical high amiloride affinity sodium channels and basolateral sodium pumps.