Cell lineage conversion of fibroblasts to specialized cell types through transdifferentiation may provide a fast and alternative cell source for regenerative medicine. Here we show that transient transduction of fibroblasts with the four reprogramming factors (Oct4, Sox2, Klf4, and c-Myc) in addition to the early lung transcription factor Nkx2-1 (also known as Ttf1), followed by directed differentiation of the cells, can convert mouse embryonic and human adult dermal fibroblasts into induced lung-like epithelial cells (iLEC). These iLEC differentiate into multiple lung cell types in air liquid interface cultures, repopulate decellularized rat lung scaffolds, and form lung epithelia composed of Ciliated, Goblet, Basal, and Club cells after transplantation into immune-compromised mice. As proof-of-concept, differentiated human iLEC harboring the Cystic Fibrosis mutation dF508 demonstrated pharmacological rescue of CFTR function using the combination of lumacaftor and ivacaftor. Overall, this is a promising alternative approach for generation of patient-specific lung-like progenitors to study lung function, disease and future regeneration strategies.