Mechanisms of injury and repair in alveolar epithelial cells (AECs) are critically involved in the progression of various lung diseases including idiopathic pulmonary fibrosis (IPF). Homeobox only protein x (HOPX) contributes to the formation of distal lung during development. In adult lung, alveolar epithelial type (AT) I cells express HOPX and lineage-labeled Hopx+ cells give rise to both ATI and ATII cells after pneumonectomy. However, the cell function of HOPX-expressing cells in adult fibrotic lung diseases has not been investigated. In this study, we have established a flow cytometry-based method to evaluate HOPX-expressing cells in the lung. HOPX expression in cultured ATII cells increased over culture time, which was accompanied by a decrease of proSP-C, an ATII marker. Moreover, HOPX expression was increased in AECs from bleomycin-instilled mouse lungs in vivo. Small interfering RNA-based knockdown of Hopx resulted in suppressing ATII-ATI trans-differentiation and activating cellular proliferation in vitro. In IPF lungs, HOPX expression was decreased in whole lungs and significantly correlated to a decline in lung function and progression of IPF. In conclusion, HOPX is upregulated during early alveolar injury and repair process in the lung. Decreased HOPX expression might contribute to failed regenerative processes in end-stage IPF lungs.