While it is generally agreed that epithelial injury is a central process in Idiopathic Pulmonary Fibrosis (IPF), differential mechanisms that determine functional repair versus dysfunctional repair are incompletely understood. Emerging data indicate that airway-derived progenitors can give rise to a variety of “transitional” and proximal-like cell states that are retained in the lung parenchyma in humans with IPF, thereby suggesting that these aberrant epithelial cell states contribute to dysfunctional repair following repetitive injury. This proposal is focused on elucidating the mediators and pathways that contribute to dysfunctional epithelial phenotypes that emerge in persistent lung fibrosis. In preliminary data, we compared the traditional single dose intratracheal (IT) bleomycin (bleo) model, which causes acute injury to the lung epithelium followed by patchy, transient fibrosis, with a multi-dose, repetitive IT bleo model, which results in persistent lung fibrosis and “metaplastic” epithelial remodeling. By single cell RNA-sequencing, we found that repetitive IT bleo induces several aberrant epithelial cell states that are not observed after single-dose IT bleo and share transcriptional homology with transitional cell states observed in human IPF. Using cell fate mapping strategies, we showed that these aberrant transitional cell states arise primarily from airway progenitors. By evaluating pathways that were differentially activated in epithelial cells after repetitive IT bleo, we found up-regulation of Hypoxia- inducible factor (HIF) signaling. Epithelial-specific deletion of HIF1/2 dramatically reduced fibrosis and metaplastic-appearing epithelial remodeling in the repetitive IT bleo model. Further, treatment with a specific HIF2 inhibitor restored epithelial structure towards normal and enhanced generation of airway progenitor- derived AT2 and AT1 cells after repetitive injury. Consistent with these data, HIF2 inhibition in mouse, as well as human, alveolar organoids promoted alveolar epithelial cell fate of airway-derived progenitors. Based on these preliminary data, we hypothesize that persistent fibrosis occurs in the lungs when repair capacity of AT2 progenitor cells is exceeded and airway precursors are unable to functionally regenerate a normal alveolar epithelial barrier. HIF2 activation alters the differentiation potential of airway progenitor cells, resulting in “proximal-like” cell fates that impair alveolar recovery and potentiate local profibrotic signaling. Specific Aims will: 1) identify factors that drive dysfunctional epithelial states present in persistent lung fibrosis, 2) determine the impact of HIF signaling in preventing functional alveolar repair after repetitive injury, and 3) investigate the niche-specific mechanisms that regulate persistent lung fibrosis. Together these novel studies will identify the origins and functions of airway-derived epithelial cell states that are directly related to the metaplastic ep...