The use of retinoids to induce human lung regeneration is under investigation in a number of studies in patients with chronic obstructive pulmonary disease (COPD). Retinoic acid (RA) has complex pleiotropic functions during vertebrate patterning and development and can induce regeneration in a number of different organ systems. Studies of retinoid signalling during lung development might provide a molecular basis to explain pharmacological induction of alveolar regeneration in adult models of lung disease. In this review the role of endogenous RA signalling during alveologenesis is explored and data suggesting that a number of exogenous retinoids can induce regeneration in the adult lung are discussed. Current controversies in this area are highlighted and a hypothesis of lung regeneration is put forward. Understanding the cellular and molecular mechanisms of induction of regeneration will be central for effective translation into patients with lung disease and may reveal novel insights into the pathogenesis of alveolar disease and senescence.