To develop stem/progenitor cell-based therapy for cystic fibrosis (CF) lung disease, it is first necessary to identify markers of human lung epithelial progenitor/stem cells and to better understand the potential for differentiation into distinct lineages. Here we investigated integrin α6β4 as an epithelial progenitor cell marker in the human distal lung. We identified a subpopulation of α6β4⁺ cells that localized in distal small airways and alveolar walls and were devoid of pro-surfactant protein C expression. The α6β4⁺ epithelial cells demonstrated key properties of stem cells ex vivo as compared to α6β4^- epithelial cells, including higher colony forming efficiency, expression of stem cell-specific transcription factor Nanog, and the potential to differentiate into multiple distinct lineages including basal and Clara cells. Co-culture of α6β4⁺ epithelial cells with endothelial cells enhanced proliferation. We identified a subset of adeno-associated virus (AAVs) serotypes, AAV2 and AAV8, capable of transducing α6β4⁺ cells. In addition, reconstitution of bronchi epithelial cells from CF patients with only 5% normal α6β4⁺ epithelial cells significantly rescued defects in Cl^- transport. Therefore, targeting the α6β4⁺ epithelial population via either gene delivery or progenitor cell-based reconstitution represents a potential new strategy to treat CF lung disease.