Pulmonary surfactant protein A (SP-A) regulates the uptake and secretion of phospholipid by alveolar type II cells and is an important component of surfactant lipid aggregates. In an attempt to understand how specific structural domains of SP-A relate to the function of the protein, we used site-directed mutagenesis of the cDNA for SP-A and heterologous expression with baculovirus vectors. Synthesis of the wild type SP-A in insect cells resulted in a form of the protein in which proline residues were not hydroxylated and that is denoted SP-Ahyp. Three mutant SP-As with substitutions in the consensus sequences for glycosylation (SP-Ahyp,glc) to prevent N-linked oligosaccharide attachment at Asn1 and Asn187 were produced, individually and in tandem. The SP-Ahyp was glycosylated at both the Asn1 and Asn187 positions, demonstrated partial sulfhydryl-dependent oligomerization, and formed incomplete oligomers in solution. The SP-Ahyp and SP-Ahyp,glc bound to immobilized carbohydrate and to phospholipid liposomes and partially competed for occupancy of a plasma-membrane receptor for SP-A. The SP-Ahyp and the SP-Ahyp,glc were equally effective inhibitors of the secretion of surfactant lipids from isolated type II cells (IC50 = 0.5 microgram/ml) and aggregated phospholipid liposomes at 20 degrees C. All of the recombinant SP-As demonstrated markedly reduced aggregation of lipid at 37 degrees C. We conclude that the hydroxylation of proline residues is required for perfect oligomerization of SP-A and for thermal stability in the interaction with lipid. Furthermore, recombinant SP-A is able to inhibit the secretion of phospholipid from isolated type II cells and to aggregate lipid vesicles independent of the presence of N-linked carbohydrate or the site of glycosylation.