To study whether nitric oxide (NO) affects surfactant function, 36 young rats inhaled one of the following humidified environments for 24 h: 1) air; 2) 95% O2; 3) air and 100 parts/million (ppm) NO; and 4) 95% O2 and 100 ppm NO. The treatments did not change the recovery of phospholipid from bronchoalveolar lavage (BAL). Exposure to NO of animals that breathed either air or 95% O2 increased the minimum surface tension of surfactant from BAL at low (1.5 mumol/ml), but not at high (4 mumol/ml), phosphatidylcholine concentration. After inhaled NO, the nonsedimentable protein of BAL decreased the surface activity of surfactant (1 mumol phosphatidylcholine/ml) more than the protein from the controls. NO treatment of animals that breathed either air or 95% O2 affected neither the quantity nor the molecular weight distribution of nonsedimentable protein. Hyperoxia increased the amount of the nonsedimentable protein, whereas NO increased the iron saturation of transferrin. The surfactant fraction and the nonsedimentable protein from BAL were separately exposed to 80 ppm NO in vitro. NO exposure had no effect on the surface activity of surfactant fraction. NO exposure of nonsedimentable protein from the control animals (no NO) increased the inhibition of the surface activity and changed the adsorption spectrum of the protein, suggesting conversion of hemoglobin to methemoglobin. Nonsedimentable protein from NO-exposed animals contained methemoglobin. We propose that surfactant dysfunction caused by inhaled NO is in part due to alteration of protein(s) in epithelial lining fluid that in turn inactivates surfactant.