The pulmonary surfactant film spanning the inner alveolar surface prevents alveolar collapse during the end-exhalation and reduces the work of breathing. Nanoparticles (NPs) present in the atmosphere or nanocarriers targeted through the pulmonary route for medical purposes challenge this biological barrier. During interaction with or passage of NPs through the alveolar surfactant, the biophysical functioning of the film may be altered. However, experimental evidence showing detailed biophysical interaction of NPs with the pulmonary surfactant film are scant. In this study, we have investigated the impact of a hydrophobic polyorganosiloxane (AmOrSil20) NPs on the integrity as well as on the structural organization of the model pulmonary surfactant film. Primarily, scanning force microscopic techniques and electron microscopy have been used to visualize the topology as well as to characterize the localization of nanoparticles within the compressed pulmonary surfactant film. We could show that the NPs partition in the fluid phase of the compressed film at lower surface pressure, and at higher surface pressure, such NPs interact extensively with the surface-associated structures. Major amounts of NPs are retained at the interface and are released slowly into the aqueous subphase during repeated compression/expansion cycles. Further, the process of vesicle insertion into the interfacial film was observed to slow down with increasing NP concentrations. The hydrophobic AmOrSil20 NPs up to a given concentration do not substantially affect the structural organization and functioning of pulmonary surfactant film; however, such NPs do show drastic impacts at higher concentrations.