Rat fetal lung is a target tissue for 1 alpha,25-dihydroxyvitamin D3 [1 alpha,25 (OH)2 D3]. We have identified the cells that respond to the hormone and tested the hypothesis that the lung is also a source of 1 alpha,25(OH)2D3. We found that 1) at the end of pregnancy (days 20-21) alveolar type II cells (ATII) bore 1 alpha,25(OH)2D3 receptors and responded to the hormone. Incubating these cells with 10(-9) M 1 alpha,25(OH)2D3 for 48 h stimulated the synthesis (87.3 +/- 9.1%) and release (61.7 +/- 6.1%) of disaturated phosphatidylcholine; 2) EB-1213, a 1 alpha,25(OH)2D3 analogue with low calcemic activity, had similar effects on ATII; 3) neither fetal lung fibroblasts nor neonatal ATII (day 2 postpartum) expressed 1 alpha,25(OH)2D3 receptors; and 4) in contrast, fetal lung fibroblasts taken on days 19-22 of gestation converted [3H]25(OH)D3 to [3H]1 alpha,25(OH)2D3, whereas ATII and skin fibroblasts did not. These findings suggest that 1 alpha,25(OH)2D3 is a local mediator of epithelial-mesenchymal cell interactions in the developing rat lung and that 1 alpha,25(OH)2D3 or EB-1213 might be therapeutically useful in treating the respiratory distress syndrome of premature neonates.