We assessed the capacity of plastic-adherent cultured bone marrow cells to serve as precursors of differentiated parenchymal cells of the lung. By intravenously delivering lacZ-labeled cells into wild-type recipient mice after bleomycin-induced lung injury, we detected marrow-derived cells engrafted in recipient lung parenchyma as cells with the morphological and molecular phenotype of type I pneumocytes of the alveolar epithelium. At no time after marrow cell injection, did we detect any engraftment as type II pneumocytes. In addition, we found that cultured and fresh aspirates of bone marrow cells can express the type I pneumocyte markers, T1alpha and aquaporin-5. These observations challenge the current belief that adult alveolar type I epithelial cells invariably arise from local precursor cells and raise the possibility of using injected marrow-derived cells for therapy of lung diseases characterized by extensive alveolar damage.