The regeneration of alveolar epithelial cells is a critical aspect of alveolar reorganization after lung injury. Although alveolar Type II (AT2) cells have been described as progenitor cells for alveolar epithelia, more remains to be understood about how their progenitor cell properties are regulated. A nuclear, chromatin-bound green fluorescence protein reporter (H2B-GFP) was driven from the murine surfactant protein–C (SPC) promoter to generate SPC H2B-GFP transgenic mice. The SPC H2B-GFP allele allowed the FACS-based enrichment and gene expression profiling of AT2 cells. Approximately 97% of AT2 cells were GFP-labeled on Postnatal Day 1, and the percentage of GFP-labeled AT2 cells decreased to approximately 63% at Postnatal Week 8. Isolated young adult SPC H2B-GFP⁺ cells displayed proliferation, differentiation, and self-renewal capacity in the presence of lung fibroblasts in a Matrigel-based three-dimensional culture system. Heterogeneity within the GFP⁺ population was revealed, because cells with distinct alveolar and bronchiolar gene expression arose in three-dimensional cultures. CD74, a surface marker highly enriched on GFP⁺ cells, was identified as a positive selection marker, providing 3-fold enrichment for AT2 cells. In vivo, GFP expression was induced within other epithelial cell types during maturation of the distal lung. The utility of the SPC H2B-GFP murine model for the identification of AT2 cells was greatest in early postnatal lungs and more limited with age, when some discordance between SPC and GFP expression was observed. In adult mice, this allele may allow for the enrichment and future characterization of other SPC-expressing alveolar and bronchiolar cells, including putative stem/progenitor cell populations.