Emphysema is defined as abnormal permanent enlargement of the airspace distal to the terminal bronchioles. The pathogenesis of pulmonary emphysema remains unclear. Cigarette smoking is the most important risk factor for this global issue, although air pollution in general as well as other factors may contribute to this disease. In our pre-clinical work, we have demonstrated that the injection of bone marrow-derived “alveolar progenitor cells” into the pulmonary vascular system lead to local engraftment into the lung parenchyma. However, only very limited differentiation was observed according to epithelial or endothelial lineages. To address this problem we are now culturing bone marrow derived alveolar progenitor cells which are being injected together with extracellular scaffold material (i.e. matrix) in order to encourage self organization into functional lung units.