Wnt/β-catenin signaling regulates progenitor cell fate decisions during lung development and in various adult tissues. Ectopic activation of Wnt/β-catenin signaling promotes tissue repair in emphysema, a devastating lung disease with progressive loss of parenchymal lung tissue. The identity of Wnt/β-catenin responsive progenitor cells and the potential impact of Wnt/β-catenin signaling on adult distal lung epithelial progenitor cell function in emphysema are poorly understood. Here, we used a TCF/Lef:H2B/GFP reporter mice to investigate the role of Wnt/β-catenin signaling in lung organoid formation. We identified an organoid-forming adult distal lung epithelial progenitor cell population characterized by a low Wnt/β-catenin activity, which was enriched in club and alveolar epithelial type (AT)II cells. Endogenous Wnt/β-catenin activity was required for the initiation of multiple subtypes of distal lung organoids derived from the Wntlow epithelial progenitors. Further ectopic Wnt/β-catenin activation specifically led to an increase in alveolar organoid number; however, the subsequent proliferation of alveolar epithelial cells in the organoids did not require constitutive Wnt/β-catenin signaling. Distal lung epithelial progenitor cells derived from the mouse model of elastase-induced emphysema exhibited reduced organoid forming capacity. This was rescued by Wnt/β-catenin signal activation, which largely increased the number of alveolar organoids. Together, our study reveals a novel mechanism of lung epithelial progenitor cell activation in homeostasis and emphysema.