Cell replacement therapy is a promising approach for treatment of lung disease such as cystic fibrosis, although rates of engraftment need to be improved. We previously showed improved cell retention in the lung using transtracheal delivery compared to intravenous injection. Here, we optimized other parameters of cell delivery using 7-day cultured bone marrow cells (BMCs). Retention of BMC in the lung was dose-dependent. Naphthalene treatment had maximal effects on BMC retention when given 2 days before cell delivery. Naphthalene treatment of the donor amplified a CCSP(+) population and increased retention efficiency in the recipient. Repeated naphthalene treatment and repeated cell delivery both resulted in greater retention. The contribution of the second cell dose was minimal suggesting that a second delivery of BMC promotes proliferation of the first. Busulfan-induced myelosuppression augmented retention of exogenous BMC by up to 20-fold. These BMC helped CCSP reconstitution. Using the optimal delivery techniques and cytokeratin-18-driven green fluorescent protein (GFP) reporter mice, we detected threefold more GFP suggesting more BMC differentiated to epithelial cells. We propose that improved engraftment in the lung will increase cell replacement and thus be a more efficient therapeutic approach for various lung diseases.