In cultured alveolar epithelial cells, hypoxia induces a downregulation of the two main Na proteins, the epithelial Na channel (ENaC) and the Na,K-ATPase. However, the in vivo effects of hypoxia on alveolar epithelial transport have not been well studied. Therefore, the objectives of this study were to investigate in an in vivo rat model if hypoxia induces a reduction in vectorial Na and fluid transport across the alveolar epithelium in vivo, and if a change in net fluid transport is associated with modification in the expression and/or activity of Na transport proteins. Rats were exposed to 8% O₂ from 3 to 24 h. Hypoxia induced a progressive decrease in alveolar liquid clearance (ALC) reaching 50% at 24 h, an effect that was related primarily to a decrease in amiloride-sensitive transepithelial Na transport. On RNase protection assay of alveolar type II (ATII) cells isolated immediately after hypoxic exposure, steady state levels of mRNA were increased for α -rENaC and β₁-Na, K-ATPase, whereas the levels of γ -rENaC and α₁-Na,K-ATPase were unchanged. On Western blots of ATII cell membranes, α -ENaC subunit protein slightly increased, whereas the amount of α₁- and β₁-Na,K-ATPase protein were unchanged with hypoxia. Thus, the decrease in transepithelial Na transport was not explained by a parallel change in gene expression or the quantity of transport proteins. Interestingly, hypoxia-induced decrease in ALC was completely reversed by intra-alveolar administration of the β₂ agonist, terbutaline (10^{− 4} M). These results suggest that hypoxia-induced decrease in Na transport is not simply related to a downregulation of Na transport proteins but rather to a decrease in Na protein activity by either internalization of the proteins and/or direct alteration of the protein in the membrane. The dramatic increase of ALC with β₂-agonist therapy indicates that the decrease of transepithelial Na and fluid transport during hypoxia is rapidly reversible, a finding of major clinical significance.