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 keep the air sacs open, preventing collapse during exhalation and facilitating gas exchange. In addition to surfactant production, Type II pneumocytes also contribute to the repair and regeneration of the alveolar epithelium after injury. They can differentiate into Type I pneumocytes, which are essential for gas exchange, ensuring the lungs remain functional and healthy.