Impaired alveolar epithelial regeneration in patients with idiopathic pulmonary fibrosis (IPF) and chronic obstructive pulmonary disease (COPD) is attributed to telomere dysfunction in type II alveolar epithelial cells (ACs). Genetic susceptibility, aging, and toxicant exposures, including tobacco smoke (TS), contribute to telomere dysfunction in ACs. Here we investigated whether improvement of telomere function plays a role in CSP7-mediated protection of ACs against ongoing senescence and apoptosis during bleomycin (BLM)-induced pulmonary fibrosis (PF) as well as alveolar injury caused by chronic TS exposure. We found a significant telomere shortening in ACs isolated from IPF and COPD lungs in line with other studies. These cells showed increased in addition to its post-translational modification with induction of activated and , suggesting a -mediated loss of AC renewal. Further, we found increased expression of , a -inducible E3 ubiquitin ligase known to down-regulate telomere repeats binding factor 2 (). Consistent with the loss of and upregulation of , telomerase reverse transcriptase () was downregulated in ACs. ACs from fibrotic lungs of mice either repeatedly instilled with BLM or isolated from chronic TS exposure-induced lung injury model showed reduced telomere length along with induction of , , and as well as loss of and , which were reversed in wild-type mice after treatment with CSP7. Interestingly, mice, or those lacking microRNA-34a expression in ACs, resisted telomere dysfunction, while mice failed to respond to CSP7 treatment, suggesting feed-forward induction and pathway contributes to telomere dysfunction.