Lung surfactant is a complex mixture of lipids and proteins, which is secreted from the alveolar type II epithelial cell and coats the surface of alveoli as a thin layer. It plays a crucial role in the prevention of alveolar collapse through its ability to reduce surface tension. Under normal conditions, surfactant homeostasis is maintained by balancing its release and the uptake by the type II cell for recycling and the internalization by alveolar macrophages for degradation. Little is known about how the surfactant pool is monitored and regulated. Here we show, by an analysis of gene-targeted mice exhibiting massive accumulation of surfactant, that Ig-Hepta/GPR116, an orphan receptor, is expressed on the type II cell and sensing the amount of surfactant by monitoring one of its protein components, surfactant protein D, and its deletion results in a pulmonary alveolar proteinosis and emphysema-like pathology. By a coexpression experiment with Sp-D and the extracellular region of Ig-Hepta/GPR116 followed by immunoprecipitation, we identified Sp-D as the ligand of Ig-Hepta/GPR116. Analyses of surfactant metabolism in Ig-Hepta^+/+ and Ig-Hepta^−/− mice by using radioactive tracers indicated that the Ig-Hepta/GPR116 signaling system exerts attenuating effects on (i) balanced synthesis of surfactant lipids and proteins and (ii) surfactant secretion, and (iii) a stimulating effect on recycling (uptake) in response to elevated levels of Sp-D in alveolar space.