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Idiopathic pulmonary fibrosis (IPF) is a progressive and fatal degenerative lung disease of unknown etiology. Although in its final stages it implicates, in a reactive manner, all lung cell types, the initial damage involves the alveolar epithelial compartment, in particular the alveolar epithelial type 2 cells (AEC2s). AEC2s serve dual progenitor and surfactant secreting functions, both of which are deeply impacted in IPF. Thus, we hypothesize that the size of the surfactant processing compartment, as measured by LysoTracker incorporation, allows the identification of different epithelial states in the IPF lung. Flow cytometry analysis of epithelial LysoTracker incorporation delineates two populations (Lysohigh and Lysolow) of AEC2s that behave in a compensatory manner during bleomycin injury and in the donor/IPF lung. Employing flow cytometry and transcriptomic analysis of cells isolated from donor and IPF lungs, we demonstrate that the Lysohigh population expresses all classical AEC2 markers and is drastically diminished in IPF. The Lysolow population, which is increased in proportion in IPF, co-expressed AEC2 and basal cell markers, resembling the phenotype of the previously identified intermediate AEC2 population in the IPF lung. In that regard, we provide an in-depth flow-cytometry characterization of LysoTracker uptake, HTII-280, proSP-C, mature SP-B, NGFR, KRT5, and CD24 expression in human lung epithelial cells. Combining functional analysis with extracellular and intracellular marker expression and transcriptomic analysis, we advance the current understanding of epithelial cell behavior and fate in lung fibrosis. [ABSTRACT FROM AUTHOR]