Transport of protein across the alveolar epithelial barrier is a critical process in recovery from pulmonary edema and is also important in maintaining the alveolar milieu in the normal healthy lung. Various mechanisms have been proposed for clearing alveolar protein, including transport by the mucociliary escalator, intra-alveolar degradation, or phagocytosis by macrophages. However, the most likely processes are endocytosis across the alveolar epithelium, known as transcytosis, or paracellular diffusion through the epithelial barrier. This article focuses on protein transport studies that evaluate these two potential mechanisms in whole lung or animal preparations. When protein concentrations in the air spaces are low, e.g., albumin concentrations <0.5 g/100 ml, protein transport demonstrates saturation kinetics, temperature dependence indicating high energy requirements, and sensitivity to pharmacological agents that affect endocytosis. At higher concentrations, the protein clearance rate is proportional to protein concentration without signs of saturation, inversely related to protein size, and insensitive to endocytosis inhibition. Temperature dependence suggests a passive process. Based on these findings, alveolar albumin clearance occurs by receptor-mediated transcytosis at low protein concentrations but proceeds by passive paracellular mechanisms at higher concentrations. Because protein concentrations in pulmonary edema fluid are high, albumin concentrations of 5 g/100 ml or more, clearance of alveolar protein occurs by paracellular pathways in the setting of pulmonary edema. Transcytosis may be important in regulating the alveolar milieu under nonpathological circumstances. Alveolar degradation may become important in long-term protein clearance, clearance of insoluble proteins, or under pathological conditions such as immune reactions or acute lung injury.