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The SARS-CoV-2 B.1.617.2 (Delta) variant was first identified in the state of Maharashtra in late 2020 and spread throughout India, outcompeting pre-existing lineages including B.1.617.1 (Kappa) and B.1.1.7 (Alpha) 1 . In vitro, B.1.617.2 is 6-fold less sensitive to serum neutralising antibodies from recovered individuals, and 8-fold less sensitive to vaccine-elicited antibodies as compared to wild type (WT) Wuhan-1 bearing D614G. Serum neutralising titres against B.1.617.2 were lower in ChAdOx-1 versus BNT162b2 vaccinees. B.1.617.2 spike pseudotyped viruses exhibited compromised sensitivity to monoclonal antibodies against the receptor binding domain (RBD) and N-terminal domain (NTD). B.1.617.2 demonstrated higher replication efficiency in both airway organoid and human airway epithelial systems compared to B.1.1.7, associated with B.1.617.2 spike in a predominantly cleaved state compared to B.1.1.7. The B.1.617.2 spike protein was able to mediate highly efficient syncytium formation that was less sensitive to inhibition by neutralising antibody as compared to WT spike. Additionally we observed that B.1.617.2 had higher replication and spike mediated entry as compared to B.1.617.1, potentially explaining B.1.617.2 dominance. In an analysis of over 130 SARS-CoV-2 infected healthcare workers across three centres in India during a period of mixed lineage circulation, we observed reduced ChAdOx-1 vaccine effectiveness against B.1.617.2 relative to non-B.1.617.2, with the caveat of possible residual confounding. Compromised vaccine efficacy against the highly fit and immune evasive B.1.617.2 Delta variant warrants continued infection control measures in the post-vaccination era. India's first wave of SARS-CoV-2 infections in mid-2020 was relatively mild and was controlled by a nationwide lockdown. Since easing of restrictions, India has seen expansion in cases of COVID-19 since March

Summary Tissue regeneration is a multi-step process mediated by diverse cellular hierarchies and states that are also implicated in tissue dysfunction and pathogenesis. Here we leveraged single-cell RNA sequencing in combination with in vivo lineage tracing and organoid models to finely map the trajectories of alveolar-lineage cells during injury repair and lung regeneration. We identified a distinct AT2-lineage population, damage-associated transient progenitors (DATPs), that arises during alveolar regeneration. We found that interstitial macrophage-derived IL-1β primes a subset of AT2 cells expressing Il1r1 for conversion into DATPs via a HIF1α -mediated glycolysis pathway, which is required for mature AT1 cell differentiation. Importantly, chronic inflammation mediated by IL-1β prevents AT1 differentiation, leading to aberrant accumulation of DATPs and impaired alveolar regeneration. Together, this stepwise mapping to cell fate transitions shows how an inflammatory niche controls alveolar regeneration by controlling stem cell fate and behavior.