Alveologenesis is the culmination of lung development and involves the correct temporal and spatial signals to generate the delicate gas exchange interface required for respiration. Using a novel Wnt signaling reporter system, we demonstrate the emergence of a Wnt-responsive alveolar epithelial cell sublineage that arises during alveologenesis called the axin2+ alveolar type 2 cell or AT2Axin2. The number of AT2Axin2 cells increases substantially during late lung development, correlating with a wave of Wnt signaling during alveologenesis. Transcriptome analysis, in vivo clonal analysis, and ex vivo lung organoid assays reveal that AT2sAxin2 promote enhanced AT2 cell growth during generation of the alveolus. Activating Wnt signaling results in expansion of AT2s whereas inhibition of Wnt signaling inhibits AT2 cell development and shunts alveolar epithelial development towards the alveolar type 1 cell lineage. These findings reveal a wave of Wnt-dependent AT2 expansion required for lung alveologenesis and maturation.

During the stepwise specification and differentiation of tissue-specific multipotent progenitors, lineage-specific transcriptional networks are activated or repressed to orchestrate cell specification. The gas-exchange niche in the lung contains two major epithelial cell types, alveolar type 1 (AT1) and AT2 cells, and the timing of lineage specification of these cells is critical for the correct formation of this niche and postnatal survival. Integrating cell-specific lineage tracing studies, spatially specific mRNA transcript and protein expression, and single-cell RNA-sequencing analysis, we demonstrate that specification of alveolar epithelial cell fate begins concomitantly with the proximal–distal specification of epithelial progenitors and branching morphogenesis earlier than previously appreciated. By using a newly developed dual-lineage tracing system, we show that bipotent alveolar cells that give rise to AT1 and AT2 cells are a minor contributor to the alveolar epithelial population. Furthermore, single-cell assessment of the transcriptome identifies specified AT1 and AT2 progenitors rather than bipotent cells during sacculation. These data reveal a paradigm of organ formation whereby lineage specification occurs during the nascent stages of development coincident with broad tissue-patterning processes, including axial patterning of the endoderm and branching morphogenesis.

Highlights d Fgfr2 maintains AT2 cell fate during postnatal development and after acute injury d AT2 cell differentiation drives morphological remodeling during lung regeneration d Cell division is not required to maintain AT2 cell fate during regeneration