Biosynthesis of sphingomyelin from ceramides was investigated in lung subcellular fractions by incubating a lyophilized mixture of albumin and subcellular fraction (0.1-0.2 mg of protein) coated with [acyl-14C]-ceramide and phosphatidyl[methyl-3H]choline in Tris-buffer. The lamellar-body-rich fraction exhibited the highest specific activity for sphingomyelin biosynthesis measured by 14C incorporation into sphingomyelins or by [3H]phosphocholine transfer from phosphatidylcholines. Plasma membranes formed the next most active fraction, followed by the 'smooth' and, then, the 'rough' endoplasmic reticulum. Sphingomyelin biosynthesis by lamellar bodies was optimum at pH 7.4 and was inhibited by sphingomyelins formed. Slight inhibitory effects were also observed with Mn2+, Ca2+ and lysophosphatidylcholine. Phosphocholine transfer from CDPcholine was not observed under the reaction conditions employed. Ceramide conversion and phosphocholine transfer increased with ceramide concentration to reach a maximum at about 0.06 mM. The highest conversion rate was observed when 18:1 ceramide was used as an acceptor. When 1-palmitoyl-2-oleoylphosphatidylcholine was the phosphocholine donor, the overall biosynthesis of sphingomyelin was much higher than when using dipalmitoylphosphatidylcholine. These results suggest the possible involvement of the studied reaction in the control of the degree of saturation of the surfactant phosphatidylcholine.