SP-C, a highly hydrophobic, 3.7-kDa protein constituent of lung surfactant, has been isolated from bovine lung lavage, purified, and reconstituted into binary lipid mixtures of 1,2-dipalmitoyl-phosphatidylcholine (DPPC) and 1,2-dipalmitoylphosphatidylglycerol (DPPG). Fourier transform infrared (FT-IR) spectroscopy has been applied to examine SP-C secondary structure, the average orientation of alpha-helical segments relative to the bilayer normal in membrane films, and the effect of protein on the thermotropic properties of the phospholipid acyl chains. In addition, dynamic surface measurements were made on phospholipid films at the A/W interface in the presence and absence of SP-C. SP-C (0.5 mol %) was found to possess about 60% alpha-helical secondary structure in lipid vesicles. Higher levels (1.5 mol %) of SP-C resulted in a slight increase of beta-forms, possibly resulting from protein aggregation. The helical segments exhibited an average angle of orientation of about 24 degrees with respect to the bilayer normal, suggesting a trans-bilayer orientation of the peptide. The observation that 70% of the peptide bond hydrogens are hard to exchange in D2O further reflects the hydrophobic nature of the molecule. SP-C produced little effect on the thermotropic properties of the binary lipid mixture, as measured from acyl chain C-H and C-D stretching frequencies. However, the presence of 1 mol % protein markedly reduced the viscance and increased the elasticity of surface films suggesting a mechanism by which SP-C facilitates the spreading of phospholipids on an aqueous surface. The possible physiological consequences of these observations are discussed.