Expression of surfactant protein C (SP-C), which is restricted to alveolar type II epithelial cells of the adult lung, is critically dependent on thyroid transcription factor 1 (TTF-1). In the present study we have demonstrated that Erm, a member of the Ets family of transcription factors, is expressed in the distal lung epithelium during development and is also restricted to alveolar type II cells in the adult. Erm was up-regulated by fibroblast growth factors (FGFs) in culture, and blocking FGF signaling inhibited Erm expression both in vivo and in vitro. The SP-C minimal promoter was found to contain two potential Ets binding sites, and electrophoretic mobility shift assays showed that two 20-bp wild-type oligonucleotides containing the 5-GGA(A/T)-3 Ets consensus binding motif were shifted by nuclear extracts from MLE15 cells. Co-transfection assays showed that Erm by itself had little effect on SP-C promoter activity but that Erm significantly enhanced TTF-1-mediated SP-C transcription. Mutation of one of the Ets binding sites reduced SP-C transcription to background levels, whereas mutation of the other site resulted in increased SP-C transcription. Protein-protein interactions between Erm and TTF-1 were demonstrated by mammalian two-hybrid assays and by co-immunoprecipitation assays. Mapping studies showed that the Ets domain of Erm and the combined N terminus and homeodomain of TTF-1 were critical for this interaction. Treatment of primary cultures of adult alveolar type II cells with siRNA targeting Erm diminished expression of both Erm and SP-C but had no effect on â€-actin or GAPDH (glyceraldehyde-3-phosphate dehydrogenase). Taken together, these results demonstrate that Erm is involved in SP-C regulation, which results from an interaction with TTF-1.Mouse lung development begins on embryonic day 9.5 (E9.5) 2 as two evaginations from the floor of the foregut endoderm into mesenchyme derived from splanchnic mesoderm. After a series of dichotomous and lateral branchings that form the pulmonary tree, the most distal epithelium continues to expand and mature during late gestation and early postnatal life to give rise to mature alveoli. Two cell types constitute the alveolar epithelium, alveolar type I and type II cells. Type I cells have a highly attenuated morphology that is ideally suited for gas exchange (1), whereas the more cuboidal type II cells function in a number of capacities. These include serving as progenitor cells for type I cells, directionally transporting sodium from apical to basolateral cell surfaces to minimize alveolar fluid, producing molecules involved in innate host defense, and synthesizing and secreting pulmonary surfactant (2).Proximate tissue interactions between the epithelium and mesenchyme play a critical role in lung morphogenesis and differentiation. Tissue recombination studies have shown that distal lung epithelial differentiation is induced as a specific response to signals produced by lung mesenchyme (3, 4). Furthermore, tissue recombination experiments in which epitheli...