Idiopathic pulmonary fibrosis (IPF) is a lethal interstitial lung disease causing alveolar remodeling, inflammation, and fibrosis. We utilized single cell RNA-sequencing (scRNA-Seq) to identify epithelial cell types and associated biological processes involved in the pathogenesis of IPF. Transcriptomic analysis of epithelial cells from normal human lung defined gene expression patterns associated with highly differentiated alveolar type 2 (AT2) cells, indicated by enrichment of RNAs critical for surfactant homeostasis. In contrast, scRNA-seq of IPF cells identified three distinct subsets of epithelial cell types with characteristics of conducting airway basal and goblet cells and, an additional atypical "transitional" cell that contribute to pathological processes in IPF. Individual IPF cells frequently co-expressed alveolar AT1, AT2, and conducting airway selective markers, demonstrating "indeterminate" states of differentiation not seen in normal lung development. Pathway analysis predicted aberrant activation of canonical signaling via TGF-ÃŸ, HIPPO/YAP, P53, and AKT-PI3 Kinase. Immunofluorescence confocal microscopy identified the disruption of alveolar structure and loss of the normal proximal-peripheral differentiation of pulmonary epithelial cells. Single cell transcriptomic analyses of respiratory epithelial cells identified loss of normal epithelial cell identities and unique contributions of epithelial cells to the pathogenesis of IPF. Present scRNA-seq transcriptomic analysis of normal and IPF respiratory epithelial cells provides a rich data source to further explore lung health and disease. Overall design: Dissociated single-cell preparations from peripheral lung of IPF patients (n = 3) and controls (n = 3) from cohort 2 were enriched for AT2 epithelial cells by FACS for CD326 (CD326) double positive, CD45 (hematopoietic) negative, CD31 (endothelial) negative cells, and HTII-280 after dissociation by proteases.