1. Transcytosis of albumin, involving the 60 kDa albumin-binding glycoprotein, gp60, was studied in cultured type II alveolar epithelial cells obtained from rat lungs. 2. Type II cells internalized the interfacial fluorescent dye RH 414, which marks for plasmalemma vesicles. Fluorescent forms of albumin and anti-gp60 antibody colocalized in the same plasmalemma vesicles. 3. Antibody (100 microg ml(-1)) cross-linking of gp60 for brief periods (15 min) markedly stimulated vesicular uptake of fluorescently tagged albumin. The caveolar disrupting agent, filipin (10 nM), abolished the stimulated internalization of albumin. 4. The vast majority of plasmalemmal vesicles carrying albumin also immunostained for caveolin-1; however, lysosomes did not stain for caveolin-1. Filipin depleted the epithelial cells of the caveolin-1-positive, albumin-transporting plasmalemma vesicles. 5. Prolonged (> 1 h) stimulation of type II cells with cross-linking anti-gp60 antibody produced loss of cell-surface gp60 and abolished endocytic albumin uptake. 6. Transalveolar transport of albumin was also studied in the isogravimetric rat lung preparation perfused at 37 degrees C. (125)I-labelled albumin was instilled into distal airspaces of lungs, and the resulting (125)I-labelled albumin efflux into the vascular perfusate was determined. 7. Unlabelled albumin (studied over a range of 0-10 g (100 instilled ml)(-1)) inhibited 40 % of the transport of labelled albumin ((5.7 +/- 0.4) x 10(5) counts (instilled ml)(-1)) with an IC(50) value of 0.34 g (100 ml)(-1). 8. Filipin blocked the displacement-sensitive component of (125)I-labelled albumin transport, but had no effect on the transport of the paracellular tracer (3)[H]mannitol. 9. Displacement-sensitive (125)I-labelled albumin transport had a significantly greater Q(10) (27-37 degrees C) than the non-displaceable component. 10. Cross-linking of gp60 by antibody instillation stimulated only the displacement-sensitive (125)I-labelled albumin transalveolar transport in intact rat lungs. 11. To estimate the transport capacity of the displacement-sensitive system, the percentage of instilled (125)I-labelled albumin counts remaining in lung tissue was compared in lungs treated with instillates containing either 0.05 g (100 ml)(-1) unlabelled albumin or 5 g (100 ml)(-1) unlabelled albumin. Approximately 25 % of instilled (125)I-labelled albumin was cleared from the lung preparations per hour by the displacement-sensitive transport pathway. This component was blocked by filipin.