The capacity of the lung to repair itself after injury is well known, but the cell types involved in lung regeneration remain undefined. The aim of this study was to isolate and characterize resident progenitor/stem cells from adult mouse lung. We report the isolation and characterization of resident stem cells that have a Sca1(+)/CD45(-)/CD31(-) phenotype. Their immunophenotype and differentiative potentiality were distinct from that of other previously described lung stem cells. These cells underwent extensive self-renewal in culture and could differentiate into endothelial and lung epithelial (alveolar type I, II, and Clara) cells in vitro. They have exhibited some mesenchymal but no neural differentiation ability. Transfer of these cells into mouse models of lung injury significantly improved survival and minimized lung destruction. These cells may provide useful tools for the study of lung stem cells and the assessment of new therapeutic approaches for lung diseases.