A molecular circuit regulates fate plasticity in emerging and adult AT2 cells.

Alveolar AT1 and AT2 cells are vital for lung gas exchange and become compromised in several diseases. While key differentiation signals are known, their emergence and fate plasticity are unclear. Here we show in the embryonic lung that single AT2s emerge at intermediate zones, extrude, and connect with nearby epithelium via interlumenal junctioning. We observe that AT2s retain fate plasticity until the bZIP transcription factor C/EBPα suppresses Notch signaling at a novel enhancer. Both and are regulated by the polycomb repressive complex (PRC2), which together form a "pulse generator" circuit that times expression and thus Notch activation, resulting in a "salt and pepper" pattern of AT1 and AT2 fate. In injured adult lungs, C/EBPα downregulation is required to re-access AT2 fate plasticity and is mediated by the dominant negative C/EBP family member CHOP. Finally, loss also activates a "defender" AT2 state, distinct from its reparative state, and we propose AT2s toggle between either state following infection to protect and repair alveoli.