The alveolus is the functional unit of gas exchange in the lung and home to two major epithelial cell lineages: alveolar epithelial type 1 (AT1) and type 2 (AT2) cells. Large, squamous AT1 cells cover the vast majority of the adult lung surface area, creating the gas diffusible interface between the external environment and the vasculature. Cuboidal AT2 cells secrete pulmonary surfactant to reduce surface tension at this air-liquid interface to prevent alveolar collapse. These cells are essential for lung function, and many are lost upon lung injury. Thus, understanding the signals required to generate and regenerate these cells is vital to develop interventions to support long term pulmonary health. In this dissertation, I use a combination of epigenetic and transcriptomic profiling, in vivo mouse genetic and injury models, ex vivo organoid assays, and human patient tissue to define essential mediators of the developmental emergence, lineage commitment, and plasticity of AT1 and AT2 cells. I demonstrate that Dnmt1 ensures the proper specification and compartmentalization of proximal and distal epithelial cell lineages during development. Developing a method to segment heterogeneously injured adult lung tissue into distinct zones by severity, I define specific injury niches and characterize the spatially restricted cellular responses to damage intensity in mice and humans. I determine that Fgfr2 maintains early AT2 cell identity and balances AT2 cell proliferation and differentiation during lung regeneration. Additionally, I demonstrate the extent of AT1 cell plasticity during neonatal and adult regeneration to generate AT2 cells. Finally, I show that Klf5 regulates AT1 cell lineage commitment during both lung development and regeneration. This work defines essential factors that determine alveolar epithelial cell fate and reveals how these choices impact both lung development and regeneration.