Birt–Hogg–Dubé (BHD) syndrome is an autosomal dominant disorder caused by germline loss-of-function mutations in Folliculin gene (FLCN). BHD is characterized by lower lobe-predominant pulmonary cysts with risk of pneumothorax, benign skin tumors (fibrofolliculomas), and renal cell carcinoma, often of an unusual chromophobe/oncocytic hybrid histology. The FLCN protein functions in multiple signaling and metabolic pathways including positive regulation of mechanistic target of rapamycin complex 1 (mTORC1) activity via FLCN's GTPase (GAP) activity for Rag C, positive regulation of Wnt signaling (in mesenchymal cells), and negative regulation of TFE3 nuclear localization. Therefore, FLCN-deficient cells are predicted to have reduced mTORC1 and Wnt activity and enhanced TFE3 activity. Folliculin also has functions in autophagy, mitochondrial biogenesis, cell-cell adhesion, 5′ AMP activated protein kinase activity, and other pathways. The specific contributions of these pathways to the lung manifestations of BHD are largely unknown. This review is focused on the pulmonary manifestations of BHD, highlighting selected recent advances in elucidating the cellular functions of FLCN and current hypotheses related to the pathogenesis of cystic lung disease in BHD, including the “stretch hypothesis.” We also discuss important knowledge gaps in the field, including the genetic, cellular and physical mechanisms of cyst pathogenesis, and the timing of cyst initiation, which may occur during lung development.