Lung cancer is the leading cause of cancer deaths worldwide, and current therapies are disappointing. Elucidation of the cell (s) of origin of lung cancer may lead to new therapeutics. In addition, the discovery of putative cancer-initiating cells with stem cell properties in solid tumors has emerged as an important area of cancer research that may explain the resistance of these tumors to currently available therapeutics. Progress in our understanding of normal tissue stem cells, tumor cell of origin, and cancer stem cells has been hampered by the heterogeneity of the disease, the lack of good in vivo transplantation models to assess stem cell behavior, and an overall incomplete understanding of the epithelial stem cell hierarchy. As such, a systematic computerized literature search of the MEDLINE database was used to identify articles discussing current knowledge about normal lung and lung cancer stem cells or progenitor cells. In this review, we discuss what is currently known about the role of cancer-initiating cells and normal stem cells in the development of lung tumors.