The amino acid sequence of surfactant protein B (SP-B), derived from human genomic and cDNA sequences, indicates that the active polypeptide is contained within the sequence of a preproprotein of 381 residues. Synthesis of mature SP-B, which requires proteolytic processing at both the NH2- and COOH-termini of the proprotein, was studied in primary cultures of rat alveolar type II epithelial cells. Type II cells were pulse labeled with [35S]methionine-cysteine for 15-30 min and chased for 0-18 h. SP-B proprotein (Mr = 42,000) accumulated in the medium at early time points but declined at later time points suggesting extracellular proteolysis of the proprotein. In contrast, surfactant protein A (SP-A), another surfactant protein, continued to accumulate extracellularly during this time period. A proteolytic fragment of SP-B (Mr = 25,000) accumulated in the medium with a slightly slower time course, consistent with extracellular proteolysis of the proprotein. Intracellular processing of SP-B was also detected. SP-B polypeptides of Mr 8,000 and 12,000 were detected intracellularly and in the medium at late time points. These forms of SP-B (Mr = 8,000 and 12,000) comigrated in two-dimensional isoelectric-focusing sodium dodecyl sulfate-polyacrylamide gel electrophoresis with mature SP-B isolated from rat alveolar lavage fluid. The mature form of SP-B (Mr = 8,000), but not the Mr 42,000 and 25,000 SP-B precursors, was also detected in lamellar bodies isolated from rat lung homogenates. These experiments demonstrate complete proteolytic processing of prepro-SP-B to the alveolar Mr 8,000 form by type II epithelial cells in vitro.(ABSTRACT TRUNCATED AT 250 WORDS)