Growth factor induced signaling cascades are key regulatory elements in tissue development, maintenance and regeneration. Perturbations of these cascades have severe consequences, leading to developmental disorders and neoplastic diseases. As a major function in signal transduction, activating mutations in RAF family kinases are the cause of human tumorigenesis, where B-RAF V600E has been identified as the prevalent mutant. In order to address the oncogenic function of B-RAF V600E, we have generated transgenic mice expressing the activated oncogene specifically in lung alveolar epithelial type II cells. Constitutive expression of B-RAF V600E caused abnormalities in alveolar epithelium formation that led to airspace enlargements. These lung lesions showed signs of tissue remodeling and were often associated with chronic inflammation and low incidence of lung tumors. The inflammatory cell infiltration did not precede the formation of the lung lesions but was rather accompanied with late tumor development. These data support a model where the continuous regenerative process initiated by oncogenic B-RAF-driven alveolar disruption provides a tumor-promoting environment associated with chronic inflammation.