We have previously shown the expression of multiple ionotropic GABAA receptor subunits in alveolar epithelial type II cells. In this study, we identified one GABAA receptor complex, α1α3β2γ2π in the adult type II cells by co-immunoprecipitation. Using cell membrane protein biotinylation, we demonstrated that this receptor was localized on the apical plasma membrane, but not on the basolateral membrane. When GABA was added to the freshly isolated type II cells, Cl− efflux rate was increased dose-dependently, which was blocked by pre-incubation with picrotoxin, an ionotropic GABA receptor antagonist. The GABA-stimulated Cl− efflux was not due to CFTR, Na+-K+-Cl− co-transporter and Ca2+-actiavted Cl− channel because glybenclamide, bumetanide, and BAPTA-AM did not have effects on this process. When type II cells were cultured on the air-liquid interface, GABA inhibited the basal and isoproterenol-stimulated apical-to-basolateral Cl− transport across the monolayer. Knock-down of the π-subunit using RNA interference eliminated the GABA-dependent Cl− efflux. In anesthetized rats, GABA inhibited both basal and isoproterenol-stimulated alveolar fluid clearance. In summary, we have identified a novel fluid transport pathway in adult rat alveolar epithelial cells, contributing to the ionotropic GABA receptors (Supported by NIH HL-052146, HL-071628 and March of Dimes to LL and AHA pre-doctoral Fellowships 0315256Z to NJ).