The hydrophobic surfactant proteins, SP-B and SP-C, have important roles in surfactant function. The importance of these proteins in normal lung function is highlighted by the lung diseases associated with abnormalities in their expression. Mutations in the gene encoding SP-B result in severe, fatal neonatal lung disease, and mutations in the gene encoding SP-C are associated with chronic interstitial lung diseases in newborns, older children, and adults. This work reviews the current state of knowledge concerning the lung diseases associated with mutations in the SP-B and SP-C genes, and the potential roles of abnormal SP-B and SP-C expression and genetic variation in these genes in other lung diseases.