NKX2-1 (NK2 homeobox 1) is a critical regulator of transcription for the surfactant protein (SP)-B and -C genes (SFTPB and SFTPC, respectively). We identified and functionally characterized two new de novo NKX2-1 mutations c.493C>T (p.R165W) and c.786_787del2 (p.L263fs) in infants with closely similar severe interstitial lung disease (ILD), hypotonia, and congenital hypothyroidism. Functional analyses using A549 and HeLa cells revealed that NKX2-1-p.L263fs induced neither SFTPB nor SFTPC promoter activation and had a dominant negative effect on wild-type (WT) NKX2-1. In contrast, NKX2-1-p.R165W activated SFTPC, to a significantly greater extent than did WT NKX2-1, while SFTPB activation was only significantly reduced in HeLa cells. In accordance with our in vitro data, we found decreased amounts of SP-B and SP-C by western blot in bronchoalveolar lavage fluid (patient with p.L263fs) and features of altered surfactant protein metabolism on lung histology (patient with NKX2-1-p.R165W). In conclusion, ILD in patients with NKX2-1 mutations was associated with altered surfactant protein metabolism, and both gain and loss of function of the mutated NKX2-1 genes on surfactant protein promoters were associated with ILD in "Brain-Lung-Thyroid syndrome".