Surface-active material is known to lower surface tension at the air/liquid interface and provide alveolar stability. Less well appreciated is the potential role of surface-active material in maintaining the patency of small airways and in transporting particles from the alveolar surface to the small airways. The interactions between the two dominant secretory cells in the terminal lung units, i.e., the alveolar type II cell and the Clara cell, are just starting to be discovered. The biochemical signals for secretion of surface-active material in vivo are still not known. The dominant physiologic stimulus is hyperventilation. Secretion in vitro is stimulated by activation of protein-kinase C (tetradecanoyl phorbol acetate), protein-kinase A (cyclic AMP, beta-adrenergic agonists, cholera toxin), and calcium ionophores (A23187 or ionomycin). The biochemical basis for secretion will be discussed.