Although several studies have shown that an induction of insulin-like growth factor (IGF) components occurs during hyperoxia-mediated lung injury, the role of these components in tissue repair is not well known. The present study aimed to elucidate the role of IGF system components in normal tissue remodeling. We used a rat model of lung injury and remodeling by exposing rats to > 95% oxygen for 48 h and allowing them to recover in room air for up to 7 days. The mRNA expression of IGF-I, IGF-II, and IGF-1 receptor (IGF-1R) increased during injury. However, the protein levels of these components remained elevated until day 3 of the recovery and were highly abundant in alveolar type II cells. Among IGF binding proteins (IGFBPs), IGFBP-5 mRNA expression increased during injury and at all the recovery time points. IGFBP-2 and -3 mRNA were also elevated during injury phase. In an in vitro model of cell differentiation, the expression of IGF-I and IGF-II increased during trans-differentiation of alveolar epithelial type II cells into type-I like cells. The addition of anti-IGF-1R and anti-IGF-I antibodies inhibited the cell proliferation and trans-differentiation to some extent, as evident by cell morphology and the expression of type I and type II cell markers. These findings demonstrate that the IGF signaling pathway plays a critical role in proliferation and differentiation of alveolar epithelium during tissue remodeling.