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Disruption of alveolar epithelial cell (AEC) differentiation is implicated in peripheral lung diseases strongly impacting morbidity and mortality worldwide, such as chronic obstructive pulmonary disease, idiopathic pulmonary fibrosis, and lung adenocarcinoma. Elucidating underlying disease pathogenesis requires a mechanistic molecular understanding of AEC differentiation. However, to date no study has comprehensively characterized the dynamic epigenomic alterations that facilitate this critical process in humans. We comprehensively profiled the epigenomic states of human AECs during type 2 to type 1-like cell differentiation, including the methylome and chromatin functional domains, and integrated this with transcriptome-wide RNA expression. Enhancer regions were drastically altered during AEC differentiation. Transcription factor binding analysis within enhancer regions revealed diverse interactive networks with enrichment for dozens of transcription factors, including NKX2-1 and FOXA family members, as well as transcription factors with previously uncharacterized roles in lung differentiation, such as members of the MEF2, TEAD, and AP1 families. Additionally, associations between transcription factors changed during differentiation, implicating a complex network of heterotrimeric complex switching may be involved in facilitating differentiation. Integration of AEC enhancer states with the catalog of enhancer elements in the Roadmap Epigenomics Mapping Consortium and Encyclopedia of DNA Elements (ENCODE) revealed that human mammary epithelial cells (HMEC) have a similar epigenomic structure to alveolar epithelium, with NKX2-1 serving as a distinguishing feature of distal lung differentiation. Taken together, our results suggest that enhancer regions with dynamic transcription factor interactions are hotspots of epigenomic alteration that help to facilitate AEC differentiation.Author SummaryHuman health and disease states are heavily influenced by the critical cellular processes that regulate and protect our genomes. One of these safeguards is the epigenome; the coordinated set of signals overlaid on top of our DNA that controls what can happen to a given stretch DNA. Hence, epigenomic signatures play a critical role in the development and maintenance of cellular fate and function. To determine the relationship between epigenomic alterations and cellular fates of distal lung cells in humans during the process that regenerates the human lung epithelial layer after injury, we performed comprehensive genome-wide profiling of many epigenetic modifications that have roles in regulating the function of the underlying DNA. We found that changes to enhancer regions, which act to turn on associated gene expression, were the major alterations to the epigenome during distal lung differentiation, and that within those regions’ dynamic changes in transcription factor associations were occurring to facilitate this process. We then characterize what was similar and distinct to the enhancers of distal lung from among other epithelial tissues and describe a novel role for specific transcription factors in this process that previously had no known role in normal lung repair.