Pepsinogen C, also known as progastricsin or pepsinogen II, is an aspartic protease expressed primarily in gastric chief cells. Prior microarray studies of an in vitro model of type 2 cell differentiation indicated that pepsinogen C RNA was highly induced, comparable to surfactant protein RNA induction. Using second-trimester human fetal lung, third-trimester postnatal and adult lung, and a model of type 2 cell differentiation, we examined the specificity of pepsinogen C expression in lung. Pepsinogen C RNA and protein were only detected in >22 wk gestation samples of neonatal lung or in adult lung tissue. By immunohistochemistry and in situ hybridization, pepsinogen C expression was restricted to type 2 cells. Pepsinogen C expression was rapidly induced during type 2 cell differentiation and rapidly quenched with dedifferentiation of type 2 cells after withdrawal of hormones. In all samples, pepsinogen C expression occurred concomitantly with or in advance of processing of surfactant protein-B to its mature 8-kDa form. Our results indicate that pepsinogen C is a type 2 cell-specific marker that exhibits tight developmental regulation in vivo during human lung development, as well as during in vitro differentiation and dedifferentiation of type 2 cells.