The Sry-related HMG box transcription factor, Sox17, is required for formation of definitive endoderm that gives rise to various organs, including thyroid, lung, liver, pancreas, and intestine. While expressed at high levels in the embryonic endoderm, Sox17 is also expressed in mature tissues, including the lung. Sox17 expression in respiratory epithelial cells was first detected in the fetal lung at embryonic day 18. Thereafter, Sox17 expression was restricted primarily to ciliated cells, suggesting its potential role in airway cell differentiation. When expressed in epithelial cells of the embryonic lung, Sox17 inhibited peripheral epithelial cell differentiation and disrupted branching morphogenesis. In vitro, Sox17 inhibited Sftpc and enhanced Foxj1 promoter activity, consistent with its expression in proximal airway cells. Conditional expression of Sox17 in peripheral respiratory epithelial cells of adult lung induced hyperplastic clusters of cells expressing increased levels of beta-catenin and differentiation markers representing multiple proximal respiratory epithelial cell types. Sox17 prolonged survival and enhanced growth and differentiation of respiratory epithelial cells in vitro. Sox17 induced plasticity of respiratory epithelial cells, reprogramming alveolar cells into epithelial cells with characteristics more typical of the proximal airway. Sites of expression and the effects of Sox17 in vivo and in vitro are consistent with a role for Sox17 or other members of the Sox family of transcription factors in differentiation of the conducting airway epithelium.