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Human transmission of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), causative pathogen of the COVID-19 pandemic, exerts a massive health and socioeconomic crisis. The virus infects alveolar epithelial type 2 cells (AT2s), leading to lung injury and impaired gas exchange, but the mechanisms driving infection and pathology are unclear. We performed a quantitative phosphoproteomic survey of induced pluripotent stem cell-derived AT2s (iAT2s) infected with SARS-CoV-2 at air-liquid interface (ALI). Time course analysis revealed rapid remodeling of diverse host systems, including signaling, RNA processing, translation, metabolism, nuclear integrity, protein trafficking, and cytoskeletal-microtubule organization, leading to cell cycle arrest, genotoxic stress, and innate immunity. Comparison to analogous data from transformed cell lines revealed respiratory-specific processes hijacked by SARS-CoV-2, highlighting potential novel therapeutic avenues that were validated by a high hit rate in a targeted small molecule screen in our iAT2 ALI system., Competing Interests: Declaration of Interests B.L.W. declares a position as CSO of Aquinnah Pharmaceuticals. A.E. and D.N.K. declare industry funding from Johnson & Johnson, Merck, and Novartis., (Copyright © 2020 Elsevier Inc. All rights reserved.)