Keratinocyte growth factor (KGF) stimulates fatty acid and phospholipid synthesis in alveolar type II cells in vitro. KGF stimulates lipogenic enzymes, including fatty acid synthase and stearyl-CoA desaturase-1, and transcription factors involved in lipogenesis, such as sterol regulatory element binding protein (SREBP)-1c and CCAAT/enhancer binding protein (C/EBP)α and C/EBPδ. To define the role of SREBP-1c on the induction of lipogenic genes and lipogenesis by KGF in primary cultures of rat type II cells, we used adenoviral vectors to alter levels of SREBP-1c. Overexpression of a dominant-negative form of SREBP-1 decreased lipogenesis and decreased the induction of fatty acid synthase and stearyl coenzyme A desaturase–1 by KGF. Conversely, adenovirus-mediated overexpression of a constitutively active form of SREBP-1c mimicked the effect of KGF on lipogenic enzymes and lipogenesis. These data indicate that SREBP-1c is required for the stimulation of lipogenesis by KGF in the alveolar type II cells and is a key regulator of lung lipid metabolism and that expression of SREBP-1c is sufficient to induce lipogenesis in rat type II cells.