Primary human alveolar type 2 (AT2) cells were immortalised by transduction with the catalytic subunit of telomerase and simian virus 40 large-tumour antigen. Characterisation by immunochemical and morphological methods demonstrated an AT1-like cell phenotype. Unlike primary AT2 cells, immortalised cells no longer expressed alkaline phosphatase, pro-surfactant protein C and TTF-1 but expressed increased caveolin-1 and RAGE. Live cell imaging using scanning ion conductance microscopy showed that the cuboidal primary AT2 cells were ~15µm and enriched with surface microvilli, while the immortal AT1 cells were attenuated >40µm, resembling these cells in situ. Transmission electron microscopy highlighted the attenuated morphology and showed endosomal vesicles in some immortal AT1 cells (but not primary AT2 cells) as found in situ. Particulate air pollution exacerbates cardiopulmonary disease. Interaction of ultrafine, nano-sized particles with the alveolar epithelium and/or translocation into the cardiovasculature may be a contributory factor. We hypothesised differential uptake of nanoparticles by AT1 and AT2 cells, depending on particle size and surface charge. Uptake of 50nm and 1µm fluorescent latex particles was investigated using confocal microscopy and scanning surface confocal microscopy of live cells. <10% primary AT2 cells internalised particles. In contrast, 75% immortal AT1 cells internalised negatively charged particles while <55% of these cells internalised positively charged particles; charge, rather than size, mattered. The process was rapid; one third of the total cell-associated negatively charged 50nm particle fluorescence measured at 24 hour was internalised during the first hour. AT1 cells could be important in translocation of particles from the lung into the circulation.