The epithelial tissues of the distal lung are continuously exposed to inhaled air, and are of research interest in studying respiratory exposure to both hazardous and therapeutic materials. Pharmaco-toxicological research depends on the development of sophisticated models of the alveolar epithelium, which better represent the different cell types present in the native lung and interactions between them. We developed an air-liquid interface (ALI) model of the alveolar epithelium which incorporates cell lines which bear features of type I (hAELVi) and type II (NCI-H441) epithelial cells. We compared morphology of single cells and the structure of cell layers of the two lines using light and electron microscopy. Working both in monotypic cultures and cocultures, we measured barrier function by trans-epithelial electrical resistance (TEER), and demonstrated that barrier properties can be maintained for 30 days. We created a mathematical model of TEER development over time based on these data in order to make inferences about the interactions occurring in these culture systems. We assessed expression of a panel of relevant genes that play important roles in barrier function and differentiation. The coculture model was observed to form a stable barrier akin to that seen in hAELVi, while expressing surfactant protein C, and having a profile of expression of claudins and aquaporins appropriate for the distal lung. We described cavities which arise within stratified cell layers in NCI-H441 and cocultured cells, and present evidence that these cavities represent an aberrant apical surface. In summary, our results support the coculture of these two cell lines to produce a model which better represents the breadth of functions seen in native alveolar epithelium.