Alveolar Type II Cells are specialized cells located in the alveoli of the lungs. They play a crucial role in producing and secreting surfactant, a substance that reduces surface tension in the alveoli, preventing their collapse during exhalation. This function is essential for maintaining proper lung function and ensuring efficient gas exchange. In addition to surfactant production, Alveolar Type II Cells also contribute to the repair and regeneration of the alveolar epithelium after injury. They can differentiate into Alveolar Type I Cells, which are responsible for gas exchange, thus playing a vital role in lung health and recovery.