Stress-induced epithelial plasticity is central to lung regeneration, fibrosis, and malignancy, but how cellular stress leads to differentiation is incompletely understood. Here, we found a central role for IRE1α, a conserved mediator of the unfolded protein response (UPR), in stimulating the plasticity of alveolar type 2 (AT2) cells. In single-cell RNA-seq, IRE1α activity was associated with loss of AT2 identity and progression toward a damage-associated transitional state unique to fibros...