Two female sibling full-term newborns developed respiratory distress shortly after birth, which progressed to respiratory failure. Tracheal lavage demonstrated presence of surfactant protein A (SP-A), but little surfactant protein B (SP-B), without aberrant surfactant protein C (SP-C). On a lung biopsy performed in both infants, prominent type II pneumocyte hyperplasia was evident. Through ultrastructural examination an absence of normally formed lamellar bodies was determined, with numerous irregular electron dense bodies within the type II pneumocytes. These electron dense bodies could also be identified in the alveolar spaces and alveolar macrophages. No alveolar tubular myelin was present. Abnormally high immunoreactivity for surfactant proteins SP-A, proSP-B, SP-B, and proSP-C was demonstrated by light microscopy. Presence of incompletely processed immunopositive proSP-B, but not proSP-C was observed in the alveolar lumina. No mutations in either the SP-B or SP-C gene were identified by sequence analysis of amplified cDNA. We conclude that these siblings exhibit an inherited surfactant deficiency characterized by abnormal accumulations of surfactant proteins within the pneumocytes. This abnormal accumulation may be due to a primary secretory defect, a defect in surfactant phospholipids, or an abnormal interaction between the phospholipids and surfactant proteins.