The mammalian lung is a complex organ containing numerous putative stem/progenitor cell populations that contribute to region-specific tissue homeostasis and repair. In this review, we discuss recent advances in identifying and studying these cell populations in the context of lung homeostasis and disease. Genetically engineered mice now allow for lineage tracing of several lung stem and progenitor cell populations in vivo during different types of lung injury repair. Using specific sets of cell surface markers, these cells can also be isolated from murine and human lung and tested in 3D culture systems and in vivo transplant assays. The pathology of devastating lung diseases, including lung cancers, is likely in part due to dysregulation and dysfunction of lung stem cells. More precise characterization of stem cells with identification of new, unique markers; improvement in isolation and transplant techniques; and further development of functional assays will ultimately lead to new therapies for a host of human lung diseases. In particular, lung cancer biology may be greatly informed by findings in normal lung stem cell biology as evidence suggests that lung cancer is a disease that begins in, and may be driven by, neoplastic lung stem cells.