Epithelial branching during the process of lung development results in the establishment of distinct functional zones, each of which is characterized by a unique cellular composition and repertoire of local progenitor cells. Significant new insights into cellular and molecular mechanisms of epithelial maintenance that provide insights into the pathophysiology of lung disease have been made in recent years. This review focuses on the complex structure-function relationship in the airway epithelium, how this epithelium is maintained in the normal state and repaired following injury, and how deregulation may contribute to airway disease and cancer.