Pulmonary surfactant protein-C (SP-C) expression by type II alveolar epithelial cells (AECs) is markedly reduced in diverse types of lung injuries and is often associated with AEC apoptosis. It is unclear whether loss of SP-C contributes to the increased p53 and urokinase-type plasminogen activator (uPA) system cross talk and apoptosis of AECs. We therefore inhibited SP-C expression in human and murine AECs using lentivirus vector expressing shRNA and tested p53 and downstream changes in uPA-fibrinolytic system. Inhibition of SP-C expression in AECs induced p53 and activated caspase-3, indicating AEC apoptosis. We also found that bleomycin or cigarette smoke exposure failed to inhibit SP-C expression or apoptosis in AECs in p53- and plasminogen activator inhibitor-1 (PAI-1)-deficient mice. Depletion of SP-C expression by lentiviral SP-C shRNA in PAI-1-deficient mice failed to induce p53 or apoptosis in AECs, while it increased both AEC p53 and apoptosis in wild type or uPA-deficient mice. SP-C inhibition in AECs also increased in CXCL1 and CXCL2, and their receptor CXCR2 as well as ICAM-1 expression, indicative of a pro-inflammatory response. Overexpression of p53-binding 3'UTR sequences in AECs inhibited PAI-1 induction while maintaining uPA and uPAR protein and mRNA expression. Further, caveolin-1 expression and phosphorylation were increased in AECs indicating an intricate link between caveolin-1 and Src kinase-mediated cell signalling and AEC apoptosis due to loss of SP-C expression through p53 and uPA system-mediated cross-talk. The role of uPA, PAI-1 and p53 in the regulation of AEC apoptosis after injury was also determined in knock out mice.