Cigarette smoking, one of the most pervasive habits in society, presents many well established health risks. While lung cancer is probably the most common and well documented disease associated with tobacco exposure, it is becoming clear from recent research that many other diseases are causally related to smoking. Whether from direct smoking or inhaling environmental tobacco smoke (ETS), termed secondhand smoke, the cells of the respiratory tissues and the lining pulmonary surfactant are the first body tissues to be directly exposed to the many thousands of toxic chemicals in tobacco. Considering the vast surface area of the lung and the extreme attenuation of the blood-air barrier, it is not surprising that this organ is the primary route for exposure, not just to smoke but to most environmental contaminants. Recent research has shown that the pulmonary surfactant, a complex mixture of phospholipids and proteins, is the first site of defense against particulates or gas components of smoke. However, it is not clear what effect smoke has on the surfactant. Most studies have demonstrated that smoking reduces bronchoalveolar lavage phospholipid levels. Some components of smoke also appear to have a direct detergent-like effect on the surfactant while others appear to alter cycling or secretion. Ultimately these effects are reflected in changes in the dynamics of the surfactant system and, clinically in changes in lung mechanics. Similarly, exposure of the developing fetal lung through maternal smoking results in postnatal alterations in lung mechanics and higher incidents of wheezing and coughing. Direct exposure of developing lung to nicotine induces changes suggestive of fetal stress. Furthermore, identification of nicotinic receptors in fetal lung airways and corresponding increases in airway connective tissue support a possible involvement of nicotine in postnatal asthma development. Finally, at the level of the alveoli of the lung, colocalization of nicotinic receptors and surfactant-specific protein in alveolar cells is suggestive of a role in surfactant metabolism. Further research is needed to determine the mechanistic effects of smoke and its components on surfactant function and, importantly, the effects of smoke components on the developing pulmonary system.