Sox2, a transcription factor critical for the maintenance of embryonic stem cells and induction of pluripotent stem cells, is expressed exclusively in the conducting airway epithelium of the lung, where it is required for differentiation of nonciliated, goblet, and ciliated cells. To determine the role of Sox2 in respiratory epithelial cells, Sox2 was selectively and conditionally expressed in nonciliated airway epithelial cells and in alveolar type II cells in the adult mouse. Sox2 induced epithelial cell proliferation within 3 days of expression. Epithelial cell proliferation was associated with increased Ki-67 and cyclin D1 staining. Expression of cell cycle genes, including FoxM1, Ccna2 (Cyclin A2), Ccnb2 (Cyclin B2), and Ccnd1 (Cyclin D1), was increased. Consistent with a role in cell proliferation, Sox2 activated the transcription of FoxM1 in vitro. In alveoli, Sox2 caused hyperplasia and ectopic differentiation of epithelial cells to those with morphologic and molecular characteristics of conducting airway epithelium. Sox2 induced the expression of conducting airway epithelial specific genes, including Scgb1a1, Foxj1, Tubb3, and Cyp2f2. Although prolonged expression of Sox2 caused cell proliferation and epithelial hyperplasia, Sox2 did not induce pulmonary tumors. Sox2 induces proliferation of respiratory epithelial cells and, subsequently, partially reprograms alveolar epithelial cells into cells with characteristics of the conducting airways.