The lung comprises an extensive surface of epithelia constantly exposed to environmental insults. Maintaining the integrity of the alveolar epithelia is critical for lung function and gaseous exchange. However, following severe pulmonary damage, what progenitor cells give rise to alveolar type I and II cells during the regeneration of alveolar epithelia has not been fully determined. In this study, we have investigated this issue by using transgenic mice in which Scgb1a1-expressing cells and their progeny can be genetically labeled with EGFP. We show that following severe alveolar damage induced either by bleomycin or by infection with influenza virus, the majority of the newly generated alveolar type II cells in the damaged parenchyma were labeled with EGFP. A large proportion of EGFP-expressing type I cells were also observed among the type II cells. These findings strongly suggest that Scgb1a1-expressing cells, most likely Clara cells, are a major cell type that gives rise to alveolar type I and II cells during the regeneration of alveolar epithelia in response to severe pulmonary damage in mice.