Surfactant replacement preparations containing either surfactant protein (SP)-B or SP-C significantly improve lung function in surfactant-deficient infants, suggesting that these peptides may be functionally redundant. SP-B is absent and SP-C is greatly diminished in the airspaces of SP-B ( − / − ) mice, which die of respiratory distress syndrome (RDS) shortly after birth. The goal of this study was to determine if elevated expression of SP-C mature peptide could reverse the neonatal lethality in SP-B ( − / − ) mice. SP-C peptide (residues 24–57 of mouse SP-C proprotein) with a hemagglutinin epitope (SP-C_24–57HA) was expressed in type II cells of transgenic mice, with the goal of crossing these animals into the SP-B ( − / − ) background. Unexpectedly, expression of the SP-C_24–57HA transgene resulted in delayed/arrested lung development and lethal, neonatal RDS of all transgenic progeny in two independent transgenic lines. In transgenic mice, SP-C_24–57HA was localized predominantly to the endoplasmic reticulum and Golgi; in contrast, SP-B and SP-C were very difficult to detect in the endoplasmic reticulum of wild-type mice. These results suggest that elevated expression of SP-C_24–57HA in type II cells resulted in aggregation of SP-C in the early secretory pathway, leading to cytotoxicity and, ultimately, altered lung development.