Type II Pneumocytes are specialized cells located in the alveoli of the lungs. They play a crucial role in maintaining lung function by producing and secreting surfactant, a substance that reduces surface tension in the alveoli. This helps prevent the alveoli from collapsing and facilitates easier breathing. In addition to surfactant production, Type II Pneumocytes are involved in the repair and regeneration of the alveolar epithelium after injury. They can differentiate into Type I Pneumocytes, which are responsible for gas exchange, thus playing a vital role in overall lung health and function.