The distal lung provides an intricate structure for gas exchange in mammalian lungs. Efficient gas exchange depends on the functional integrity of lung alveoli. The cells in the alveolar tissue serve various functions to maintain alveolar structure, integrity and homeostasis. Alveolar epithelial cells secrete pulmonary surfactant, regulate the alveolar surface liquid (ASL) volume and, together with resident and infiltrating immune cells, provide a powerful host-defense system against a multitude of particles, microbes and toxicants. It is well established that all of these cells express purinergic P2 receptors and that purinergic signaling plays important roles in maintaining alveolar homeostasis. Therefore, it is not surprising that purinergic signaling also contributes to development and progression of severe pathological conditions like pulmonary inflammation, acute lung injury/acute respiratory distress syndrome (ALI/ARDS) and pulmonary fibrosis. Within this review we focus on the role of P2 purinergic signaling in the distal lung in health and disease. We recapitulate the expression of P2 receptors within the cells in the alveoli, the possible sources of ATP (adenosine triphosphate) within alveoli and the contribution of purinergic signaling to regulation of surfactant secretion, ASL volume and composition, as well as immune homeostasis. Finally, we summarize current knowledge of the role for P2 signaling in infectious pneumonia, ALI/ARDS and idiopathic pulmonary fibrosis (IPF).