Abstract: The alveolus, where gas exchange takes place in the lung, is composed of two epithelial cell types. Alveolar epithelial type II cells (AEC2s) are cuboidal and produce surfactant while the type I cells (AEC1s) are uniquely flattened in order to allow for the diffusion of oxygen into the capillaries. The fragile structure of AEC1s has made them particularly challenging to study and isolate. As a result, there are no established models for these cells. Little is known about the development of human AEC1s, however lineage tracing studies have shown that in mice, AEC1s originate from an NKX2-1+ progenitor during development and can be derived from adult AEC2 cells during homeostasis and after injury. While many studies have been published on the mechanisms driving AEC1 differentiation, the results have been varied, and in some cases contradictory. Even so, research so far has mostly been performed in mice as there has not been an applicable human model in which to perform these studies. The recent progress in the directed differentiation of induced pluripotent stem cells (iPSC) into different lung epithelial lineages provides an opportunity to study the effects of different signaling pathways on human AEC1 differentiation. We hypothesize that the differentiation of human AEC2s into AEC1s is regulated by a combination of identifiable signaling mechanisms, including activation of the Hippo signaling effector protein YAP, and that this differentiation can be recapitulated in our iPSC in vitro model system, allowing for a source of human AEC1s for future use in basic studies, drug development, or regenerative therapies. In order to test this hypothesis, we will create a novel pluripotent stem cell-based, in vitro fluorescent model to enable the directed differentiation, tracking, and purification of human putative AEC1s. This will be a bi-fluorescent reporter iPSC line with NKX2-1GFP to enable the tracking and purification of lung progenitor cells, as well as AGERtdTomato as a marker of AEC1s. Using this reporter cell line, we will be able to interrogate different signaling mechanisms to determine their role in human AEC1 differentiation. We have preliminary data suggesting that activation of the Hippo effector protein, YAP, is likely to play a role in AEC1 differentiation and will interrogate this pathway further. In addition, we will examine other signaling pathways that, based on murine models, we hypothesize may be involved in regulating human AEC1 differentiation, including BMP, TGF, Wnt, and FGF. This iPSC derived model of human AEC1s can be used to further our understanding of AEC1 biology, as well as their involvement in diseases that disrupt the alveolar epithelium, such as pulmonary fibrosis and chronic obstructive pulmonary disease.