Idiopathic pulmonary fibrosis (IPF) is a progressive lung disease with no cure except transplantation. Abnormal alveolar epithelial regeneration is a key driver of IPF development. The function of YAP in alveolar regeneration and IPF pathogenesis remains elusive. Here, we firstly revealed activation of YAP in AEC2s from human IPF lungs and fibrotic mouse lungs. Notably, conditional deletion of YAP in mouse AEC2s exacerbated bleomycin-induced pulmonary fibrosis. Intriguingly, we showed in both conditional knockout mice and alveolar organoids that YAP deficiency impaired AEC2 proliferation and differentiation into AEC1s. Mechanistically, YAP regulated expression levels of genes associated with cell cycle progression and AEC1 differentiation. Furthermore, overexpression of YAP in vitro promoted cell proliferation. These results indicate the critical role of YAP in alveolar regeneration and IPF pathogenesis. Our findings provide new insights to the regulation of alveolar regeneration and IPF pathogenesis, paving the road for developing novel treatment strategies.