An understanding of the mechanisms underlying pulmonary fibrosis remains elusive. Once believed to result primarily from chronic inflammation, it is now clear that inflammation and chronic fibrosis, especially in diseases such as idiopathic pulmonary fibrosis/usual interstitial pneumonia, are often dissociated, and that inflammation is neither necessary nor sufficient to induce fibrosis. The origin of the primary effector cell of fibrosis in the lung, the myofibroblast, is not clearly established. Three potential sources have been hypothesized. Although conversion of resident fibroblasts and differentiation of circulating bone marrow-derived progenitors likely play a role, the possible contribution of alveolar epithelial cells (AECs), through a process termed "epithelial-mesenchymal transition" (EMT), has only recently received consideration. A process by which epithelial cells lose cell-cell attachment, polarity and epithelial-specific markers, undergo cytoskeletal remodeling, and gain a mesenchymal phenotype, EMT plays a prominent role in fibrogenesis in adult tissues such as the kidney. This review summarizes the evidence supporting a central role for EMT in the pathogenesis of lung fibrosis, the potential for EMT in AECs in vitro and in vivo and role of transforming growth factor-beta1 in this process, and the implications of epithelium-driven fibrosis on future research and treatment. Potential pathways involved in EMT are also discussed. It is hoped that a major shift in current paradigms regarding the genesis of pulmonary fibrosis and dissection of the relevant pathways may allow development of targeted interventions that could potentially reverse the process and ameliorate the debilitating effects of abnormal repair and progressive fibrosis.