Human coronavirus strain 229E (HCoV-229E) commonly causes upper respiratory tract infections. However, lower respiratory tract infections can occur in some individuals, indicating that cells in the distal lung are susceptible to HCoV-229E. This study determined the virus susceptibility of primary cultures of human alveolar epithelial cells and alveolar macrophages (AMs). Fluorescent antibody staining indicated that HCoV-229E could readily infect AMs, but no evidence was found for infection in differentiated alveolar epithelial type II cells and only a very low level of infection in type II cells transitioning to the type I-like cell phenotype. However, a human bronchial epithelial cell line (16HBE) was readily infected. The innate immune response of AMs to HCoV-229E infection was evaluated for cytokine production and interferon (IFN) gene expression. AMs secreted significant amounts of tumour necrosis factor alpha (TNF-α), regulated on activation normal T-cell expressed and secreted (RANTES/CCL5) and macrophage inflammatory protein 1β (MIP-1β/CCL4) in response to HCoV-229E infection, but these cells exhibited no detectable increase in IFN-β or interleukin-29 in mRNA levels. AMs from smokers had reduced secretion of TNF-α compared with non-smokers in response to HCoV-229E infection. Surfactant protein A (SP-A) and SP-D are part of the innate immune system in the distal lung. Both surfactant proteins bound to HCoV-229E, and pre-treatment of HCoV-229E with SP-A or SP-D inhibited infection of 16HBE cells. In contrast, there was a modest reduction in infection in AMs by SP-A, but not by SP-D. In summary, AMs are an important target for HCoV-229E, and they can mount a pro-inflammatory innate immune response to infection.