Multiple cells contribute to the function of lungs. Pulmonary neuroendocrine cells (PNECs) are important for the regulation of breathing and carcinogenesis, although they represent only a small population of the airway lining. Achaete-Scute homologue-1 (Ascl1), a proneural basic helix-loop-helix transcription factor, is critical for the development of PNECs. We postulated that Ascl1-defined cells (ASDCs) may be progenitors, and traced their fate during development and injury repair. R26R-stop-lacZ (Rosa) reporter mice were crossed with Ascl1-Cre or Ascl1-CreERTM mice, in which the Ascl1 promoter drives the expression of Cre or inducible Cre recombinase, respectively. ASDCs and their descendants will be permanently labeled. The labeled cells were characterized by immunohistochemistry, using highly specific differentiation markers. Lineage studies revealed a population that proliferates before the pseudoglandular stage, and widely contributes to different compartments. When ASDCs were labeled on Embryonic Day 9.5, they gave rise to both airway and alveolar cells, but when labeled on Embryonic Day 11.5, they only gave rise to airway cells. In postnatal naphthalene injury, ASDCs contributed to regenerating Clara cells. In conclusion, Ascl1-defined cells in the lung represent a novel multipotent lineage, indicating a close relationship of neuroendocrine cells with other cell types.