The lipid transporter, ATP-binding cassette class A3 (ABCA3), is a highly conserved multi-membrane-spanning protein that plays a critical role in the regulation of pulmonary surfactant homeostasis. Mutations in ABCA3 have been increasingly recognized as one of the causes of inherited pulmonary diseases. These monogenic disorders produce familial lung abnormalities with pathological presentations ranging from neonatal surfactant-deficiency-induced respiratory failure to childhood or adult diffuse parenchymal lung diseases for which specific treatment modalities remain limited. More than 200 ABCA3 mutations have been reported to date with approximately three quarters of patients presenting as compound heterozygotes. Recent advances in our understanding of the molecular basis underlying normal ABCA3 biosynthesis and processing and of the mechanisms of alveolar epithelial cell dysregulation caused by the expression of its mutant forms are beginning to emerge. These insights and the role of environmental factors and modifier genes are discussed in the context of the considerable variability in disease presentation observed in patients with identical ABCA3 gene mutations. Moreover, the opportunities afforded by an enhanced understanding of ABCA3 biology for targeted therapeutic strategies are addressed.