Members of the ATP binding cassette (ABC) protein superfamily actively transport a wide range of substrates across cell and intracellular membranes. Mutations in ABCA3, a member of the ABCA subfamily with unknown function, lead to fatal respiratory distress syndrome (RDS) in the newborn. Using cultured human lung cells, we found that recombinant wild-type hABCA3 localized to membranes of both lysosomes and lamellar bodies, which are the intracellular storage organelles for surfactant. In contrast, hABCA3 with mutations linked to RDS failed to target to lysosomes and remained in the endoplasmic reticulum as unprocessed forms. Treatment of those cells with the chemical chaperone sodium 4-phenylbutyrate could partially restore trafficking of mutant ABCA3 to lamellar body-like structures. Expression of recombinant ABCA3 in non-lung human embryonic kidney 293 cells induced formation of lamellar body-like vesicles that contained lipids. Small interfering RNA knockdown of endogenous hABCA3 in differentiating human fetal lung alveolar type II cells resulted in abnormal, lamellar bodies comparable with those observed in vivo with mutant ABCA3. Silencing of ABCA3 expression also reduced vesicular uptake of surfactant lipids phosphatidylcholine, sphingomyelin, and cholesterol but not phosphatidylethanolamine. We conclude that ABCA3 is required for lysosomal loading of phosphatidylcholine and conversion of lysosomes to lamellar body-like structures.