Alveologenesis, the final stage in lung development, substantially remodels the distal lung, expanding the alveolar surface area for efficient gas exchange. Secondary crest myofibroblasts (SCMF) exist transiently in the neonatal distal lung and are crucial for alveologenesis. However, the pathways that regulate SCMF function, proliferation and temporal identity remain poorly understood. To address this, we purified SCMFs from reporter mice, performed bulk RNA-seq and found dynamic changes in Hippo-signaling components during alveologenesis. We deleted the Hippo effectors Yap/Taz from Acta2-expressing cells at the onset of alveologenesis, causing a significant arrest in alveolar development. Using single cell RNA-seq, we identified a distinct cluster of cells in mutant lungs with altered expression of marker genes associated with proximal mesenchymal cell types, airway smooth muscle and alveolar duct myofibroblasts. In vitro studies confirmed that Yap/Taz regulates myofibroblast-associated gene signature and contractility. Together, our findings show that Yap/Taz is essential for maintaining functional myofibroblast identity during postnatal alveologenesis.