Autologous lung-derived mesenchymal stem cells (LMSCs) were transplanted endoscopically into sheep with experimental emphysema to assess their capacity to regenerate functional tissue. LMSC lines were derived from transbronchial biopsies, cloned at passage 2, expanded in culture, and labeled. A delivery scaffold containing 1% fibrinogen, 20 μg/ml of fibronectin, and 20 μg/ml of poly-L-lysine was used to promote cell attachment and spreading. Treatment animals received scaffold containing 5-10 × 10(6) cells/site; control animals received scaffold alone. Phenotypic markers, differentiation capacity, extracellular matrix protein expression, and paracrine function of LMSCs were characterized in vitro. Responses to LMSC transplantation in vivo were assessed in terms of clinical toxicity, lung physiology, change in tissue mass (measured by CT scanning) and perfusion (measured by scintigraphy scanning), and tissue histology. At 4-week follow-up, transplants were well tolerated and associated with increased tissue mass and lung perfusion compared to control treatment. Histology confirmed cell retention, increased cellularity, and increased extracellular matrix content following LMSC treatment. Labeled cells were distributed in the alveolar septum and peribronchiolar interstitium. Some label was also present within phagocytes, indicating that a fraction of autologous LMSCs do not survive transplantation. These results suggest that endobronchial delivery of autologous LMSCs has potential therapeutic utility for regenerating functional lung in emphysema.