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The iron carrier protein transferrin plays a prominent antioxidant and anti-bacterial role in the lower respiratory tract and is present at elevated concentrations in lung epithelial lining fluid relative to plasma. The level of transferrin receptor synthesis in primary cultures of rat alveolar epithelial cells (AECs) was investigated. Transferrin receptor was found to be synthesized early in AEC cultures with the alveolar type II cell-like phenotype. Cell-surface receptor localization was attenuated upon apparent transdifferentiation to the alveolar type I cell-like phenotype later in culture. Binding of (125)I-labeled transferrin to the receptor indicated that surface and total cellular transferrin receptor levels were decreased in the type I-like cells. Inclusion of keratinocyte growth factor (KGF) in culture media (10 ng/ml) resulted in retention of transferrin receptor localized to the basolateral surface. Transferrin-receptor-specific internalization of (59)Fe-transferrin was also limited to the basolateral surface of KGF-treated monolayers. These data suggest that alveolar type II (but not type I) cells express functional transferrin receptor in adult rat alveolar epithelium.