Alveolar epithelial regeneration is critical for normal lung function and becomes dysregulated in disease. While alveolar type 2 (AT2) and club cells are known distal lung epithelial progenitors, determining if alveolar epithelial type 1 (AT1) cells also contribute to alveolar regeneration has been hampered by lack of highly specific mouse models labeling AT1 cells. To address this, the Gramd2 CreERT2 transgenic strain was generated and crossed to Rosa mTmG mice. Extensive cellular characterization, including distal lung immunofluorescence and cytospin staining, confirmed that GRAMD2 + AT1 cells are highly enriched for green fluorescent protein (GFP). Interestingly, Gramd2 CreERT2 GFP + cells were able to form organoids in organoid co-culture with Mlg fibroblasts. Temporal scRNAseq revealed that Gramd2 + AT1 cells transition through numerous intermediate lung epithelial cell states including basal, secretory and AT2 cell in organoids while acquiring proliferative capacity. Our results indicate that Gramd2 + AT1 cells are highly plastic suggesting they may contribute to alveolar regeneration.