Alveolarization of the developing lung is an important step toward the switch from intrauterine life to breathing oxygen-rich air after birth. The distal airways structurally change to minimize the gas exchange path, and Type II pneumocytes increase the production of surfactants, which are required to reduce surface tension at the air-liquid interface in the alveolus. Hypoxia-inducible factor 2α (Hif2α) is an oxygen-regulated transcription factor expressed in endothelial and Type II cells, and its expression increases toward the end of gestation. We investigated the role of Hif2α in Type II cells by conditionally expressing an oxygen-insensitive mutant of Hif2α in airway epithelial cells during development. Newborn mice expressing the mutant Hif2α were born alive but quickly succumbed to respiratory distress. Subsequent analysis of the lungs revealed dilated alveoli covered with enlarged, aberrant Type II cells and a diminished number of Type I cells. The Type II cells accumulated glycogen in part by increased glucose uptake via the up-regulation of the glucose transporter 1. Furthermore, the cells lacked two crucial enzymes involved in the metabolism of glycogen into surfactant lipids, lysophosphatidylcholine acyltransferase and ATP-binding cassette sub-family A member 3. We conclude that Hif2α is a key regulator in alveolar maturation and the production of phospholipids by Type II cells.