Claudin proteins are major constituents of epithelial and endothelial tight junctions (TJs) that regulate paracellular permeability to ions and solutes. Claudin 18, a member of the large claudin family, is highly expressed in lung alveolar epithelium. To elucidate the role of claudin 18 in alveolar epithelial barrier function, we generated claudin 18 knockout (C18 KO) mice. C18 KO mice exhibited increased solute permeability and alveolar fluid clearance (AFC) compared with wild-type control mice. Increased AFC in C18 KO mice was associated with increased β-adrenergic receptor signaling together with activation of cystic fibrosis transmembrane conductance regulator, higher epithelial sodium channel, and Na-K-ATPase (Na pump) activity and increased Na-K-ATPase β1 subunit expression. Consistent with in vivo findings, C18 KO alveolar epithelial cell (AEC) monolayers exhibited lower transepithelial electrical resistance and increased solute and ion permeability with unchanged ion selectivity. Claudin 3 and claudin 4 expression was markedly increased in C18 KO mice, whereas claudin 5 expression was unchanged and occludin significantly decreased. Microarray analysis revealed changes in cytoskeleton-associated gene expression in C18 KO mice, consistent with observed F-actin cytoskeletal rearrangement in AEC monolayers. These findings demonstrate a crucial nonredundant role for claudin 18 in the regulation of alveolar epithelial TJ composition and permeability properties. Increased AFC in C18 KO mice identifies a role for claudin 18 in alveolar fluid homeostasis beyond its direct contributions to barrier properties that may, at least in part, compensate for increased permeability.