SP-B is the only surfactant-associated protein absolutely required for postnatal lung function and survival. Complete deficiency of SP-B in mice and humans results in lethal, neonatal respiratory distress syndrome and is characterized by a virtual absence of lung compliance, highly disorganized lamellar bodies, and greatly diminished levels of SP-C mature peptide; in contrast, lung structure and function in SP-C null mice is normal. This review attempts to integrate recent findings in humans and transgenic mice with the results of in vitro studies to provide a better understanding of the functions of SP-B and SP-C and the structural basis for their actions.