Clara cells were first described as a morphologically distinct cell type by Kolliker in 1881, but they take their name from the seminal study of human and rabbit bronchioles by Max Clara in 1937. Since their discovery, Clara cells have been identified as central players in protecting the airway from environmental exposures. The diverse functions of Clara cells in lung homeostasis include roles in xenobiotic metabolism, immune system regulation, and progenitor cell activity. Recent identification of a sub-population of Clara cells as a bronchiolar tissue-specific stem cell and a potential tumor initiating cell has focused the attention of cell and molecular biologists on the Clara cell and its behavior under normal and disease conditions.