For alveolar type I cells, phenotype plasticity and physiology other than gas exchange await further clarification due to in vitro study difficulties in isolating and maintaining type I cells in primary culture. Using an established in vitro model of human fetal type II cells, in which the type II phenotype is induced and maintained by adding hormones, we assessed for transdifferentiation in culture toward a type I-like cell with hormone removal for up to 144 h, followed by electron microscopy, permeability studies, and RNA and protein analysis. Hormone withdrawal resulted in diminished type II cell characteristics, including decreased microvilli, lamellar bodies, and type II cell marker RNA and protein. There was a simultaneous increase in type I characteristics, including increased epithelial cell barrier function indicative of a tight monolayer and increased type I cell marker RNA and protein. Our results indicate that hormone removal from cultured human fetal type II cells results in transdifferentiation toward a type I-like cell. This model will be useful for continued in vitro studies of human fetal alveolar epithelial cell differentiation and phenotype plasticity.