Ovine pulmonary adenocarcinoma (OPA) is a naturally occurring cancer in sheep, with clinical, radiologic, and histopathologic features similar to that of human pneumonic-type bronchioloalveolar carcinoma. JSRV (Jaagsiekte Sheep RetroVirus) is the etiologic agent of this contagious lung cancer in sheep. Cells involved in the tumor derive from alveolar type II cells and Clara cells, epithelial cells of the distal respiratory tract. These cells are the major site for viral expression in JSRV-infected animals. Recent studies clearly described the oncogenic properties of the JSRV envelope protein both in vitro and in vivo. Interestingly, the cellular pathways involved in the transformation process seem to be dependent of the origin and type of the cell used. In order to investigate the specific interactions between JSRV and alveolar type II cells, we developed an in vitro experimental model in which lung epithelial cells were isolated from OPA and control lungs. Cells in culture expressed alveolar type II cell specific markers such as surfactant protein (SP)-A, SP-C, and a high alkaline phosphatase activity. Alveolar Type II cells derived from tumoral lungs showed a proliferative advantage and expressed the JSRV virus. The reverse transcriptase activity decreased over passages in monolayer culture conditions, but was efficiently maintained in three-dimensional culture conditions. We thus report on the first in vitro system whereby alveolar type II cells from OPA were efficiently maintained in culture and stably expressed JSRV. This novel experimental model will set up the stage for elucidating lung epithelial transformation in the JSRV-induced tumor.