Surfactant protein C (SP-C; Sftpc) gene expression is restricted to pulmonary type II epithelial cells. The proximal SP-C promoter region contains critical binding sites for nuclear factor I (NFI) and thyroid transcription factor 1 (TTF-1; also called Nkx2.1). To test the hypothesis that NFI isoforms interact with TTF-1 to differentially regulate SP-C transcription, we performed transient transfection assays in JEG-3 cells, a choriocarcinoma cell line with negligible endogenous NFI or TTF-1 activity. Cotransfection of NFI family members with TTF-1 induced synergistic activation of the SP-C promoter that was further enhanced by p300. TTF-1 directly interacts with the conserved DNA binding and dimerization domain of all NFI family members in coimmunoprecipitation and mammalian two-hybrid experiments. To determine whether SP-C expression is regulated by NFI in vivo, a chimeric fusion protein containing the DNA binding and dimerization domain of NFI-A and the Drosophila engrailed transcriptional repression domain (NFIen) was conditionally expressed in mice under control of a doxycycline-inducible transgene. Induction of NFIen in a subset of type II cells inhibited SP-C gene expression without affecting expression of TTF-1 in doxycycline-treated double-transgenic mice. Taken together, these findings support the hypothesis that NFI family members interact with TTF-1 to regulate type II cell function.