Cigarette smoke (CS)-induced alveolar destruction and energy metabolism changes are known contributors to the pathophysiology of chronic obstructive pulmonary disease (COPD). This study examines the effect of CS exposure on metabolism in alveolar type II cells. Male A/J mice (8 wk old) were exposed to CS generated from a smoking machine for 4 or 8 weeks, and a recovery group was exposed to CS for 8 weeks and allowed to recover for 2 weeks. Alveolar type II cells were isolated from air- or CS- exposed mice. Acute CS exposure led to a reversible airspace enlargement in A/J mice as measured by the increase in mean linear intercept, indicative of alveolar destruction. The effect of CS exposure on cellular respiration was studied using the XF Extracellular Flux Analyzer. A decrease in respiration while metabolizing glucose was observed in the CS-exposed group, indicating altered glycolysis that was compensated by an increase in palmitate utilization; palmitate utilization was accompanied by an increase in the expression of CD36 and carnitine-palmitoyl transferase 1 in type II alveolar cells for the transport of palmitate into the cells and into mitochondria, respectively. The increase in palmitate use for energy production likely affects the surfactant biosynthesis pathway, as evidenced by the decrease in phosphatidylcholine levels and the increase in phospholipase A₂ activity after CS exposure. These findings help our understanding of the mechanism underlying the surfactant deficiency observed in smokers and provide a target to delay the onset of COPD.