Acute lung injury associated with surfactant deficiency remains a major cause of pulmonary morbidity and mortality. Since signal transducer and activator of transcription-3 (STAT-3) play important roles in protecting respiratory epithelial cells during injury, we hypothesized that STAT-3 may regulate gene expression in type II cells that mediate surfactant phospholipid synthesis. Conditional deletion of Stat-3 in respiratory epithelial cells in the lung of transgenic mice (Stat-3^/ mice) decreased surfactant phospholipid synthesis and secretion. Deletion of Stat-3 was associated with decreased expression of Akt2, Srebf-1, and other genes expressed in type II cells that may influence surfactant phospholipid synthesis (Glut-1, Slc34a2, Gpam, Acox2, and Cds2). Stat-3^/ mice were more susceptible to intratracheal lipopolysaccharide (LPS). Saturated phosphatidylcholine and SP-B levels were significantly decreased in bronchoalveolar lavage fluid from LPS treated Stat-3^/ mice. Alveolar capillary leak, pro-inflammatory cytokine expression, and perturbations of lung mechanics caused by LPS were exacerbated after deletion of STAT-3. STAT-3 plays a critical role in the regulation of surfactant lipid synthesis in the normal lung and during lung injury caused by LPS.