Chronic lung disease is increasing in prevalence and there is urgent need to advance our understanding of human lung biology in order to improve diagnosis and current treatments. The Th2 inflammatory cytokine Interleukin 13 (IL13) has been associated with both obstructive and fibrotic lung diseases, but its specific effect on the epithelial stem cells in the gas exchange compartment of the lung (alveolar space) has not been explored. Here, we use in vivo lung models of homeostasis and repair, ex vivo organoid platforms, and novel quantitative proteomic techniques to show that IL13 can directly disrupt the self-renewal and differentiation of both murine and human type 2 alveolar epithelial cells (AEC2s). We also show that IL13 promotes ectopic expression of markers typically associated with bronchiolar airway cells and commonly seen in the alveolar region of lung tissue from patients with idiopathic pulmonary fibrosis (IPF). Furthermore, we identify a number of proteins that are differentially secreted by AEC2s in response to IL13, suggesting that protein-based biomarkers may identify subsets of patients with pulmonary disease that is driven by “Th2-high” biology. This would allow us to understand some of the biological heterogeneity that exists in patients with chronic lung disease and to identify subsets of patients who may be more likely to respond to targeted anti-IL13 treatments.