Epithelial-mesenchymal cell interactions and factors that control normal lung development are key players in lung injury, repair, and fibrosis. A number of studies have investigated the roles and sources of epithelial progenitors during lung regeneration; such information, however, is limited in lung fibroblasts. Thus, understanding the origin, phenotype, and roles of fibroblast progenitors in lung development, repair, and regeneration helps address these limitations. Using a combination of platelet-derived growth factor receptor α-green fluorescent protein (PDGFRα-GFP) reporter mice, microarray, real-time polymerase chain reaction, flow cytometry, and immunofluorescence, we characterized two distinct interstitial resident fibroblasts, myo- and matrix fibroblasts, and identified a role for PDGFRα kinase activity in regulating their activation during lung regeneration. Transcriptional profiling of the two populations revealed a myo- and matrix fibroblast gene signature. Differences in proliferation, smooth muscle actin induction, and lipid content in the two subpopulations of PDGFRα-expressing fibroblasts during alveolar regeneration were observed. Although CD140α(+)CD29(+) cells behaved as myofibroblasts, CD140α(+)CD34(+) appeared as matrix and/or lipofibroblasts. Gain or loss of PDGFRα kinase activity using the inhibitor nilotinib and a dominant-active PDGFRα-D842V mutation revealed that PDGFRα was important for matrix fibroblast differentiation. We demonstrated that PDGFRα signaling promotes alveolar septation by regulating fibroblast activation and matrix fibroblast differentiation, whereas myofibroblast differentiation was largely PDGFRα independent. These studies provide evidence for the phenotypic and functional diversity as well as the extent of specificity of interstitial resident fibroblasts differentiation during regeneration after partial pneumonectomy.