Type-II (T-II) pneumocytes from 27 day fetal rabbit lungs were grown in an organotypic system (OS) and used to study phospholipid (PL) synthesis. Organotypic preparations were also used as a means for isolating purified T-II cells as well as lung fibroblasts. The PL synthetic properties of the various culture preparations were studied using palmitate, choline and acetate as precursors. In all cultures, excepting fibroblasts, saturated phosphatidylcholine (SPC) was a major PL product. The molar incorporation rate into PL for the substrates studied was: palmitate > choline > acetate. The proportion of these substrates incorporated into SPC versus total phosphatidylcholine (PC) differed between OS and monolayer cultures. In the OS the order of substrate incorporation into SPC as a percent of total PC formed, was acetate > choline > palmitate, whereas in T-II cultures the order was choline > acetate > palmitate. Among the culture preparations examined, the greatest similarity was found between the OS and the mixed fibroblast/T-II preparations. In this regard it was observed that a mixed culture of fibroblasts and T-II cells produced larger proportions of SPC and other surfaceactive PL than isolated T-II cells. From these observations it appears that the OS is a useful model for examining surfactant PL synthesis of T-II cells, and furthermore, may serve as an effective system for the isolation and study of T-II pneumocytes.