The alveolar compartment, the fundamental gas exchange unit in the lung, is critical for tissue oxygenation and viability. We explored hepatocyte growth factor (HGF), a pleiotrophic cytokine that promotes epithelial proliferation, morphogenesis, migration, and resistance to apoptosis, as a candidate mediator of alveolar formation and regeneration. Mice deficient in the expression of the HGF receptor Met in lung epithelial cells demonstrated impaired airspace formation marked by a reduction in alveolar epithelial cell abundance and survival, truncation of the pulmonary vascular bed, and enhanced oxidative stress. Administration of recombinant HGF to tight-skin mice, an established genetic emphysema model, attenuated airspace enlargement and reduced oxidative stress. Repair in the TSK/+ mouse was punctuated by enhanced akt and stat3 activation. HGF treatment of an alveolar epithelial cell line not only induced proliferation and scattering of the cells but also conferred protection against staurosporine-induced apoptosis, properties critical for alveolar septation. HGF promoted cell survival was attenuated by akt inhibition. Primary alveolar epithelial cells treated with HGF showed improved survival and enhanced antioxidant production. In conclusion, using both loss-of-function and gain-of-function maneuvers, we show that HGF signaling is necessary for alveolar homeostasis in the developing lung and that augmentation of HGF signaling can improve airspace morphology in murine emphysema. Our studies converge on prosurvival signaling and antioxidant protection as critical pathways in HGF–mediated airspace maintenance or repair. These findings support the exploration of HGF signaling enhancement for diseases of the airspace.