Alveolar type II cells are specialized cells located in the lungs, specifically in the alveoli, which are tiny air sacs responsible for gas exchange. These cells 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 vital for maintaining proper lung function and ensuring efficient breathing. 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 essential for gas exchange, thus playing a key role in maintaining the overall health of the respiratory system.