ABSTRACT Alveolar type 2 (AT2) cells are heterogeneous cells; where specialized AT2 subpopulations within this lineage exhibit stem cell properties. However, the existence of quiescent, immature cells within the AT2 lineage, which get activated during lung regeneration, is unknown. Sftpc CreERT2/+ ; tdTomato flox/flox mice were used for the labelling of AT2 cells and labeled subpopulations were analyzed by flow cytometry, qPCR, ATAC-seq, gene arrays, pneumonectomy, and culture of precision-cut lung slides. Human lungs from donor and IPF were also analyzed. In mice, we detected two distinct AT2 subpopulations with low tdTomato level (Tom Low ) and high tdTomato level (Tom High ). Tom Low express lower level of AT2 differentiation markers, Fgfr2b and Etv5 , while Tom High , as bona fide mature AT2 cells, show higher level of Sftpc , Sftpb , Sftpa1 , Fgfr2b , and Etv5 . ATAC-seq analysis indicates that Tom Low and Tom High constitute two distinct cell populations with specific silencing of Sftpc , Rosa26 and cell cycle gene loci in Tom Low . Upon pneumonectomy, Tom Low but not Tom High cells proliferate and upregulate the expression of Fgfr2b , Etv5 , Sftpc , Ccnd1 and Ccnd2 compared to sham. Tom Low cells overexpress PD-L1, an immune inhibitory membrane receptor ligand, which is used by flow cytometry to differentially isolate these two sub-populations. In the human lung, PD-L1 and HTII-280 antibodies are used by flow cytometry to differentially sort mature AT2 (HTII-280-high, PD-L1-low) as well as an additional subpopulation of epithelial cells characterized by HTII-280-Low and PD-L1-high. We have identified a novel population of AT2 quiescent immature progenitor cells in mouse that proliferate upon pneumonectomy and provided evidence for the existence of such cells in human. Significance of the work The characterization and mechanism of the proliferation of a novel and relevant pool of AT2 progenitor cells for the repair/regeneration process after injury are critical to improving respiratory function in patients with lung disease.