While the factors that regulate the onset and progression of idiopathic pulmonary fibrosis (IPF) are incompletely understood, recent investigations have revealed that endoplasmic reticulum (ER) stress and activation of the unfolded protein response (UPR) are prominent in alveolar epithelial cells in this disease. Initial observations linking ER stress and IPF were made in cases of familial interstitial pneumonia (FIP), the familial form of IPF, in a family with a mutation in surfactant protein C (SFTPC). Subsequent studies involving lung biopsy specimens revealed that ER stress markers are highly expressed in the alveolar epithelium in IPF and FIP. Recent mouse modeling has revealed that induction of ER stress in the alveolar epithelium predisposed to enhanced lung fibrosis after treatment with bleomycin, which is mediated at least in part by increased alveolar epithelial cell (AEC) apoptosis. Emerging data also indicate that ER stress in AECs could impact fibrotic remodeling by altering inflammatory responses and inducing epithelial-mesenchymal transition. Although the cause of ER stress in IPF remains unknown, common environmental exposures such as herpesviruses, inhaled particulates, and cigarette smoke induce ER stress and are candidates for contributing to AEC dysfunction by this mechanism. Together, investigations to date suggest that ER stress predisposes to AEC dysfunction and subsequent lung fibrosis. However, many questions remain regarding the role of ER stress in initiation and progression of lung fibrosis, including whether ER stress or the UPR could be targeted for therapeutic benefit.