Mapping the spatial distribution and molecular identity of constituent cells is essential for understanding tissue dynamics in health and disease. We lack a comprehensive map of human distal airways, including the terminal and respiratory bronchioles (TRBs), which are implicated in respiratory diseases. Here, using spatial transcriptomics and single-cell profiling of microdissected distal airways, we identify molecularly distinct TRB cell types that have not-to our knowledge-been previously characterized. These include airway-associated LGR5 fibroblasts and TRB-specific alveolar type-0 (AT0) cells and TRB secretory cells (TRB-SCs). Connectome maps and organoid-based co-cultures reveal that LGR5 fibroblasts form a signalling hub in the airway niche. AT0 cells and TRB-SCs are conserved in primates and emerge dynamically during human lung development. Using a non-human primate model of lung injury, together with human organoids and tissue specimens, we show that alveolar type-2 cells in regenerating lungs transiently acquire an AT0 state from which they can differentiate into either alveolar type-1 cells or TRB-SCs. This differentiation programme is distinct from that identified in the mouse lung. Our study also reveals mechanisms that drive the differentiation of the bipotent AT0 cell state into normal or pathological states. In sum, our findings revise human lung cell maps and lineage trajectories, and implicate an epithelial transitional state in primate lung regeneration and disease.