The recovery of an intact epithelium following lung injury is critical for restoration of lung homeostasis. The initial processes following injury include an acute inflammatory response, recruitment of immune cells, and epithelial cell spreading and migration upon an autologously secreted provisional matrix. Injury causes the release of factors that contribute to repair mechanisms including members of the epidermal growth factor and fibroblast growth factor families (TGF-alpha, KGF, HGF), chemokines (MCP-1), interleukins (IL-1beta, IL-2, IL-4, IL-13), and prostaglandins (PGE(2)), for example. These factors coordinate processes involving integrins, matrix materials (fibronectin, collagen, laminin), matrix metalloproteinases (MMP-1, MMP-7, MMP-9), focal adhesions, and cytoskeletal structures to promote cell spreading and migration. Several key signaling pathways are important in regulating these processes, including sonic hedgehog, Rho GTPases, MAP kinase pathways, STAT3, and Wnt. Changes in mechanical forces may also affect these pathways. Both localized and distal progenitor stem cells are recruited into the injured area, and proliferation and phenotypic differentiation of these cells leads to recovery of epithelial function. Persistent injury may contribute to the pathology of diseases such as asthma, chronic obstructive pulmonary disease, and pulmonary fibrosis. For example, dysregulated repair processes involving TGF-beta and epithelial-mesenchymal transition may lead to fibrosis. This review focuses on the processes of epithelial restitution, the localization and role of epithelial progenitor stem cells, the initiating factors involved in repair, and the signaling pathways involved in these processes.