We investigated the involvement of membrane phospholipid methylation in receptor-mediated secretion of surfactant in adult rabbit type II alveolar epithelial cells (type II pneumocyte). Phospholipid methyltransferase activity was found in type II pneumocyte microsomes. Cell cultures of adult rabbit type II pneumocytes were then used to assay methyltransferase activity in the presence of the beta-adrenergic agonist, terbutaline, and the methyltransferase inhibitor, 3-deazaadenosine. Terbutaline predictably stimulated adenylate cyclase activity and surfactant secretion. It was also found to stimulate incorporation of methyl groups into phosphatidylcholine and to increase beta-adrenergic receptor availability as assayed by binding of dihydroalprenolol (DHA). Surfactant secretion, as well as adenylate cyclase activity, were stimulated by terbutaline and were inhibited by 3-deazaadenosine. 3-Deazaadenosine did not inhibit DHA binding. These results suggest that phospholipid methylation plays a role in stimulus-secretion coupling in adult rabbit type II pneumocytes.