Ali, G.; Gibbard, D.; Ghelfi, E.; Olson, A.; Cai, J.; Balagtas, A.; Klein, I.; Maccoux, E.; Han, Y.; Guo, M.; Miura, A.; Glass, I.; Mori, M.; Brownfield, D. G.

Physical forces shape cell behavior, yet how they integrate with signaling to control fate and disease remains unclear. The alveolar epithelium is patterned by FGF signaling and mechanical stretch, but how these cues specify AT1 and AT2 cells is poorly understood. Here we show that cell membrane tension (CMT) is a conserved regulator of epithelial fate in mouse and human lungs. CMT drops before differentiation and is spatially patterned, defining where bipotent progenitors acquire AT1 or AT2 identity. Lower CMT enhances FGFR2 endocytosis and ERK signaling to drive AT2 differentiation and permits architectural remodeling that enables stretch-mediated YAP/TAZ nuclear entry for AT1 maturation. {beta}-catenin elevates CMT cell-intrinsically independent of its canonical WNT role, while embedding, compression, or fibroblast wrapping elevate CMT extrinsically. Combined intrinsic and extrinsic tension traps alveolar epithelial cells in a KRT8 state seen in fibrotic lungs. Thus, CMT integrates physical and molecular cues linking morphogenesis to fibrosis.