Idiopathic pulmonary alveolar proteinosis (PAP) is a rare lung disease characterized by accumulation of surfactant. Surfactant synthesis and secretion are restricted to epithelial type 2 (T2) pneumocytes (also called T2 cells). Clearance of surfactant is dependent upon T2 cells and macrophages. ABCG1 is highly expressed in both T2 cells and macrophages. ABCG1-deficient mice accumulate surfactant, lamellar body-loaded T2 cells, lipid-loaded macrophages, B-1 lymphocytes, and immunoglobulins, clearly demonstrating that ABCG1 has a critical role in pulmonary homeostasis. We identify a variant in the ABCG1 promoter in patients with PAP that results in impaired activation of ABCG1 by the liver X receptor α, suggesting that ABCG1 basal expression and/or induction in response to sterol/lipid loading is essential for normal lung function. We generated mice lacking ABCG1 specifically in either T2 cells or macrophages to determine the relative contribution of these cell types on surfactant lipid homeostasis. These results establish a critical role for T2 cell ABCG1 in controlling surfactant and overall lipid homeostasis in the lung and in the pathogenesis of human lung disease.