Strategies to stimulate endogenous surfactant production require a detailed understanding of the regulation of lipogenesis in alveolar type II cells. We developed culture conditions in which keratinocyte growth factor (KGF) stimulates fatty acid and phospholipid synthesis. KGF stimulated acetate incorporation into phosphatidylcholine, disaturated phosphatidylcholin, and phosphatidylglycerol more than 5% rat serum alone. To determine the mRNA levels of lipogenic enzymes and transport proteins, we analyzed gene expression by oligonucleotide microarrays. KGF increased the mRNA levels for fatty acid synthase, stearoyl-CoA desaturase-1 (SCD-1), and epidermal fatty acid–binding protein more than rat serum alone. In addition, KGF increased the mRNA levels of the transcription factors CCAAT/enhancer-binding protein α (C/EBPα) and C/EBPδ as well as SREBP-1c (ADD-1), but not PPARγ. These changes in C/EBPα and C/EBPδ were confirmed by in situ hybridization. SCD-1 was also found to be highly expressed in alveolar type II cells in vivo. Furthermore, KGF increased protein levels of fatty acid synthase, C/EBPα, C/EBPδ, SREBP-1, epidermal fatty acid–binding protein, and SCD. Finally, the liver X receptor agonist T0901317 increased acetate incorporation and SREBP-1 but not SREBP-2 protein levels. In summary, KGF stimulates lipogenesis in type II cells by a coordinated expression of lipogenic enzymes and transport proteins regulated by C/EBP isoforms and SREBP-1c.