Childhood interstitial lung disease (chILD) secondary to pulmonary surfactant deficiency is a devastating chronic lung disease in children. Clinical presentation includes mild to severe respiratory failure and fibrosis. There is no specific treatment, except lung transplantation, which is hampered by a severe shortage of donor organs, especially for young patients. Repair of lungs with chILD represents a longstanding therapeutic challenge but cell therapy is a promising strategy. As surfactant is produced by alveolar type II epithelial (ATII) cells, engraftment with normal or gene-corrected ATII cells might provide an avenue to cure. Here we used a chILD disease-like model, Sftpc-/- mice, to provide proof-of-principle for this approach. Sftpc-/- mice developed chronic interstitial lung disease with age and were hypersensitive to bleomycin. We could engraft wild-type ATII cells after low dose bleomycin conditioning. Transplanted ATII cells produced mature SPC and attenuated bleomycin-induced lung injury up to two months post-transplant. This study demonstrates that partial replacement of mutant ATII cells can promote lung repair in a mouse model of chILD-like disease.