Tumor suppressor phosphatase and tensin homologue deleted on chromosome 10 (PTEN) is a lipid phosphatase that regulates multiple cellular processes including cell polarity, migration, proliferation and carcinogenesis. In this work, we demonstrate that conditional deletion of Pten (Pten^/) in the respiratory epithelial cell proliferation and hyperplasia as early as 4-6 weeks of age. While bronchiolar cell differentiation was normal, as indicated by -tubulin and FOXJ1 expression in ciliated cells and, CCSP expression in non-ciliated cells; cell proliferation, detected by expression of Ki-67, phospho-histone-H3 and cyclin D1, was increased and associated with activation of the AKT/mTOR survival pathway. Deletion of Pten caused papillary epithelial hyperplasia characterized by a hypercellular epithelium lining papillae with fibrovascular cores that protruded into the airway lumens. Cell polarity, as assessed by sub-cellular localization of cadherin, -catenin and ZO-1, was unaltered. PTEN is required for regulation of epithelial cell proliferation in the lung and for the maintenance of the normal simple columnar epithelium characteristics of bronchi and bronchioles.