Lymphangioleiomyomatosis (LAM) is a female-specific cystic lung disease in which tuberous sclerosis complex 2 (TSC2)-deficient LAM cells, LAM-associated fibroblasts (LAFs), and other cell types infiltrate the lungs. LAM lesions can be associated with type II alveolar epithelial (AT2) cells. We hypothesized that the behavior of AT2 cells in LAM is influenced locally by LAFs. We tested this hypothesis in the patient samples and in vitro. In human LAM lung, nodular AT2 cells show enhanced proliferation when compared with parenchymal AT2 cells, demonstrated by increased Ki67 expression. Furthermore, nodular AT2 cells express proteins associated with epithelial activation in other disease states including matrix metalloproteinase 7, and fibroblast growth factor 7 (FGF7). In vitro, LAF-conditioned medium is mitogenic and positively chemotactic for epithelial cells, increases the rate of epithelial repair, and protects against apoptosis. In vitro, LAM patient-derived TSC2 null cells cocultured with LAFs upregulate LAF expression of the epithelial chemokine and mitogen FGF7, a potential mediator of fibroblast-epithelial cross talk, in a mechanistic target of rapamycin (mTOR)-dependent manner. In a novel in vitro model of LAM, ex vivo cultured LAM lung-derived microtissues promote both epithelial migration and adhesion. Our findings suggest that AT2 cells in LAM display a proliferative, activated phenotype and fibroblast accumulation following LAM cell infiltration into the parenchyma contributes to this change in AT2 cell behavior. Fibroblast-derived FGF7 may contribute to the cross talk between LAFs and hyperplastic epithelium in vivo, but does not appear to be the main driver of the effects of LAFs on epithelial cells in vitro.