Acute respiratory distress syndrome (ARDS) is characterized by an excessive pulmonary inflammatory response. Removal of excess cholesterol from the plasma membrane of inflammatory cells helps reduce their activation. The secreted apolipoprotein A-I binding protein (AIBP) has been shown to augment cholesterol efflux from endothelial cells to the plasma lipoprotein HDL. Here, we find that AIBP was expressed in inflammatory cells in the human lung and was secreted into the bronchoalveolar space in mice subjected to inhalation of LPS. AIBP bound surfactant protein B and increased cholesterol efflux from alveolar macrophages to calfactant, a therapeutic surfactant formulation. In vitro, AIBP in the presence of surfactant reduced LPS-induced p65, ERK1/2 and p38 phosphorylation, and IL-6 secretion by alveolar macrophages. In vivo, inhalation of AIBP significantly reduced LPS-induced airspace neutrophilia, alveolar capillary leak, and secretion of IL-6. These results suggest that, similar to HDL in plasma, surfactant serves as a cholesterol acceptor in the lung. Furthermore, lung injury increases pulmonary AIBP expression, which likely serves to promote cholesterol efflux to surfactant and reduce inflammation.