Mutations in the gene coding for ATP-binding cassette protein A3 (ABCA3) are recognized as a genetic cause of lung disease of varying severity. Characterization of a number of mutant ABCA3 proteins has demonstrated that the mutations generally affect intracellular localization or the ability of the protein to hydrolyze ATP. A novel, heterozygous, mutation which results in the substitution of cysteine for arginine at amino acid 295 in ABCA3 was identified in a premature infant with chronic respiratory insufficiency and abnormal lamellar bodies. Sequencing of DNA performed in study participants demonstrated that this was a mutation and not a common variant. Plasmid vectors containing ABCA3 with the identified novel mutation tagged with green fluorescent protein on the carboxy terminus were generated. The effect of the mutation on protein function was characterized by examining the glycosylation state of the mutant protein in transiently transfected HEK293 cells and by examining ATP hydrolysis activity of the mutant protein using a vanadate-induced nucleotide trapping assay in stably transfected HEK293 cells. The ABCA3 protein containing the R295C mutation undergoes normal glycosylation and intracellular localization but has dramatically reduced ATP hydrolysis activity (12% of wild type). The identification of one copy of this novel mutation in a premature infant with chronic respiratory insufficiency suggests that ABCA3 haploinsufficiency together with lung prematurity may result in more severe, or more prolonged, respiratory failure.