Background: Mutations in the NK2 homeobox 1 (NKX2-1) gene are associated with lung disease in infants and children. We hypothesize that disruption of normal surfactant gene expression with these mutations contributes to the respiratory phenotypes observed. Methods: To assess transactivational activity, cotransfection of luciferase reporter vectors containing surfactant protein B or C (SFTPB or SFTPC) promoters with NKX2-1 plasmids was performed and luciferase activity was measured. To assess the binding of mutated proteins to target DNA, electrophoretic mobility shift assays (EMSA) were performed using nuclear protein labeled with oligonucleotide probes representing NKX2-1 consensus binding sequences followed by gel electrophoresis. The effect of overexpression of wild-type (WT) and mutant NKX2-1 on SFTPB and SFTPC was evaluated with quantitative real-time PCR. Results: Decreased transactivation of the SFTPB promoter by both mutants and decreased transactivation of the SFTPC promoter by the L197P mutation was observed. EMSA demonstrated decreased DNA binding of both mutations to NKX2-1 consensus binding sequences. Transfection of A549 cells with NKX2-1 expression vectors demonstrated decreased stimulation of SFTPB and SFTPC expression by mutant proteins compared with that of WT. Conclusion: Disruption of transcriptional activation of surfactant protein genes by these DNA-binding domain mutations is a plausible biological mechanism for disruption of surfactant function and subsequent respiratory distress.