Idiopathic pulmonary fibrosis (IPF) is the prototypic progressive fibrotic interstitial lung disease. Median survival is only 3 years, and treatment options are limited. IPF is thought to be a result of a combination of genetic and environmental factors with repetitive micro-injuries to alveolar epithelial cells playing a central role. IPF is characterised by aberrant extra cellular matrix (ECM) deposition by activated myofibroblasts. Epithelial-mesenchymal transition (EMT) is a process where polarised epithelial cells undergo molecular changes allowing them to gain a mesenchymal phenotype, with a subsequent enhanced ability to produce ECM components and increased migration and/or invasion. The source of myofibroblasts in IPF has been debated for many years, and EMT has been proposed as a source of these cells. However, lineage tracing in transgenic mice suggests the contribution of epithelial cells, which have undergone EMT, to the fibroblast population may be negligible. Instead, recent findings suggest that alveolar epithelial type II (ATII) cells undergoing EMT promote a pro-fibrotic microenvironment through paracrine signalling activating local fibroblasts. This review paper explores the contribution of ATII cells, which have undergone EMT, in the context of pulmonary fibrosis.