The lung alveolar epithelium consists of type I and type II pneumocytes. In vivo, the type II cell is the progenitor cell from which the type I cell originates. When freshly-isolated type II cells are cultured under conventional conditions they rapidly lose their phenotypic properties and attain characteristics of type I cells. Taking advantage of this transdifferentiation, we sought to identify genes that are differentially expressed during culture of rat type II cells. Using suppression subtractive hybridization (SSH), a vacuolar-type H+ stop-ATPase (V-ATPase) C2 subunit gene (Atp6v1c2) was found to be enriched in freshly isolated rat type II cells compared to those cultured for 4 days. Northern blotting and reverse-transcription polymerase chain reaction (RT-PCR) confirmed the differential expression of Atp6v1c2 during in vitro culture of isolated type II cells. Expression of Atp6v1c2 was significantly reduced early during in vitro culture: almost 90% reduction was observed after 24 h of incubation as determined by real-time PCR. In situ hybridization showed that Atp6v1c2 is expressed in both bronchiolar and alveolar lung epithelial cells, an expression pattern similar to that of surfactant protein B (SP-B). Multi-tissue Northern blotting revealed a unique tissue distribution with Atp6v1c2 expression limited to lung, kidney and testis. The presence and expression of Atp6v1c2 gene transcript isoforms, resulting from alternative splicing, were also investigated. Elucidation of differential expression of Atp6v1c2 in type II cells and further studies of its regulation may provide information useful in understanding the molecular mechanism underlying phenotypic and functional changes during transdifferentiation of alveolar epithelial cells.