Multiple adult tissues are maintained by stem cells of restricted developmental potential which can only form a subset of lineages within the tissue. For instance, the two adult lung epithelial compartments (airways and alveoli) are separately maintained by distinct lineage-restricted stem cells. A challenge has been to obtain multipotent stem cells and/or progenitors that can generate all epithelial cell types of a given tissue. Here we show that mouse Sox9+ multipotent embryonic lung progenitors can be isolated and expanded long term in 3D culture. Cultured Sox9+ progenitors transcriptionally resemble their in vivo counterparts and generate both airway and alveolar cell types in vitro. Sox9+ progenitors that were transplanted into injured adult mouse lungs differentiated into all major airway and alveolar lineages in vivo in a region-appropriate fashion. We propose that a single expandable embryonic lung progenitor population with broader developmental competence may eventually be used as an alternative for region-restricted adult tissue stem cells in regenerative medicine.