Alveolar type II (ATII) cells are a key structure of the distal lung epithelium, where they exert their innate immune response and serve as progenitors of alveolar type I (ATI) cells, contributing to alveolar epithelial repair and regeneration. In the healthy lung, ATII cells coordinate the host defense mechanisms, not only generating a restrictive alveolar epithelial barrier, but also orchestrating host defense mechanisms and secreting surfactant proteins, which are important in lung protection against pathogen exposure. Moreover, surfactant proteins help to maintain homeostasis in the distal lung and reduce surface tension at the pulmonary air–liquid interface, thereby preventing atelectasis and reducing the work of breathing. ATII cells may also contribute to the fibroproliferative reaction by secreting growth factors and proinflammatory molecules after damage. Indeed, various acute and chronic diseases are associated with intensive inflammation. These include oedema, acute respiratory distress syndrome, fibrosis and numerous interstitial lung diseases, and are characterized by hyperplastic ATII cells which are considered an essential part of the epithelialization process and, consequently, wound healing. The aim of this review is that of revising the physiologic and pathologic role ATII cells play in pulmonary diseases, as, despite what has been learnt in the last few decades of research, the origin, phenotypic regulation and crosstalk of these cells still remain, in part, a mystery.