Novel human epithelial cell lines retaining characteristic features of normal peripheral airway cells were established by transfecting the SV40 large T antigen gene into primary in vitro outgrowths from normal peripheral lung specimens. These lines, designated as HPL1A to HPL1E, showed the polygonal shapes typical of epithelial cells and expressed cytokeratin in abundance. Ultrastructural examination revealed the presence of microvilli, multivesicular bodies, and multilamellar body-like structures that are characteristic of type II pneumocytes, but expression of CC1O transcripts, a highly specific marker for Clara cells, was also observed. Response to transforming growth factor beta, epidermal growth factor (EGF), and hepatocyte growth factor, all of which are thought to be important growth-regulatory molecules for cellular proliferation and developmental processes of peripheral lung, was apparent. In the HPL1A case, markedly altered cell morphology and cytoskeletal organization, potent inhibition of cell growth, and increased expression of an extracellular matrix protein were noted with transforming growth factor beta. Interestingly, both EGF and hepatocyte growth factor stimulated anchorage-dependent growth, whereas only EGF could sustain anchorage-independent proliferation. The HPL1 lines are, to our knowledge, the first series of stable epithelial lines of human peripheral lung to be described. They should be valuable for investigating various aspects of growth regulation and oncogenic processes, including the mechanisms of acquisition of anchorage independence and the interrelationships of genetic changes identified previously in lung cancers. In addition, the HPL1 lines may also prove useful for development of in vitro models for other human lung disorders as well as to elucidate the mechanisms of peripheral lung differentiation.