Bronchopulmonary dysplasia (BPD) remains a major complication of prematurity resulting in significant morbidity and mortality. The pathology of BPD is multifactorial and leads to alveolar simplification and distal lung injury. Previous studies have shown a beneficial effect of systemic treatment with bone marrow-derived mesenchymal stromal cells (MSCs) and MSC-conditioned media (MSC-CM) leading to amelioration of the lung parenchymal and vascular injury in vivo in the hyperoxia murine model of BPD. It is possible that the beneficial response from the MSCs is at least in part due to activation of endogenous lung epithelial stem cells. Bronchioalveolar stem cells (BASCs) are an adult lung stem cell population capable of self-renewal and differentiation in culture, and BASCs proliferate in response to bronchiolar and alveolar lung injury in vivo. Systemic treatment of neonatal hyperoxia-exposed mice with MSCs or MSC-CM led to a significant increase in BASCs compared with untreated controls. Treatment of BASCs with MSC-CM in culture showed an increase in growth efficiency, indicating a direct effect of MSCs on BASCs. Lineage tracing data in bleomycin-treated adult mice showed that Clara cell secretory protein-expressing cells including BASCs are capable of contributing to alveolar repair after lung injury. MSCs and MSC-derived factors may stimulate BASCs to play a role in the repair of alveolar lung injury found in BPD and in the restoration of distal lung cell epithelia. This work highlights the potential important role of endogenous lung stem cells in the repair of chronic lung diseases.