Respiratory distress syndrome is characterized by fibrin deposition in the lung. Fibrin adversely affects surfactant function and stimulates proliferation of fibroblasts. There is evidence that these properties may be important to the development of bronchopulmonary dysplasia. Despite successful initial treatment of neonatal respiratory distress syndrome with surfactant, the incidence of bronchopulmonary dysplasia has not decreased. In previous studies, it has been demonstrated that rat fetal distal lung epithelium (FDLE) possesses both procoagulant and anticoagulant properties. In this report, we have demonstrated (using factor VII-deficient plasma) that tissue factor is expressed on the FDLE surface and promotes thrombin generation. To regulate thrombin within this procoagulant environment, we have developed a novel anticoagulant, antithrombin-heparin covalent complex (ATH) that can be retained within the lung after intrapulmonary instillation. We have demonstrated that ATH was superior to antithrombin plus standard heparin in suppressing thrombin generation ( P < 0.001) and prothrombin consumption ( P < 0.01) in recalcified defibrinated plasma on the surface of FDLE. Further studies with ATH in vivo need to be performed.