Although it has been many years since publication of the first peer-reviewed studies showing that bone marrow (BM)-derived cells can become mature-appearing epithelial cells, we still know very little regarding the mechanisms, kinetics, cells, and potential clinical utility or pathology associated with this phenomenon. The initial discovery of BM-derived epithelial cells (BMDE) in the liver was published by Petersen and colleagues (Petersen BE, Bowen WC, Patrene KD, Mars WM, Sullivan AK, Murase N, Boggs SS, Greenberger JS, Goff JP. Bone marrow as a potential source of hepatic oval cells. Science 1999;284:1168-1170). Since that time, BMDE were identified in the skin, eye, GI tract, kidney, and the lung. Surprisingly, once several laboratories started to examine the effects of BM cells after tissue injury, BM-derived cells of different types were found to decrease tissue injury and enhance tissue repair, often without engraftment of marrow-derived epithelial cells. Thus, the potentially beneficial effects of BM-derived cells in some tissue microenvironments may be unrelated to differentiation into nonhematopoietic cell types. Here, I focus on recent findings from my laboratory as well as several other laboratories on the effects of BM cells on lung damage, and BMDE in the lung, including tracheal epithelial cells, bronchiolar epithelial cells, and type II pneumocytes in the alveoli. Potential mechanisms underlying the appearance of marrow-derived epithelial cells, and the role of tissue damage are discussed.