Background <p>Mesenchymal stromal cells (MSCs) and their secretomes have been extensively studied for the treatment of various pulmonary diseases; however, consistent therapeutic benefits have yet to be demonstrated. The fundamental biology of lung-resident MSCs remains poorly understood.</p> Methods <p>We used a previously characterized fetal lung mesenchyme-specific reporter mouse model to initially identify lung MSC subpopulations based on their developmental origins. Bulk RNA-seq was then used to confirm mouse lung MSC differences at the transcriptomic level and to separate human lung MSC subsets. A variety of in vitro methods were used to measure cell proliferation, differentiation, adhesion, T cell modulation, alveolar epithelial cell growth.</p> Results <p>We identified two distinct subsets of mouse lung resident MSCs: one originating from embryonic lung mesenchymal progenitors, and another with an as-yet undetermined tissue origin. While both subsets exhibit core MSC characteristics, transcriptomic analyses revealed distinct gene expression profiles, which were conserved in MSCs isolated from human lungs. These subsets also differed in key biological functions, including proliferation, adhesion, immunomodulation, and their capacity to support alveolar epithelial cell growth in both mouse and human systems.</p> Conclusions <p>Two different lung MSC subpopulations have been identified and characterized. These findings advance our understanding of the complexity of mesenchymal progenitors in lung injury repair and disease and may inform the development of effective stem cell-based therapies for pulmonary conditions.</p>