In this study, we report the isolation of previously undocumented progenitor epithelial cells in pig bone marrow that expressed Clara cell secretory protein (Ccsp), a marker for lung progenitor cells, and the stem cell markers octamer-binding transcription factor (Oct4) and stage-specific embryonic antigen-1 (SSEA-1). These progenitor cells showed increased self-renewal capacity and expressed epithelial cell markers such as pancytokeratin (Pan-K), cytokeratin 18 (K-18), and occludin. Importantly, these cells expressed receptors for both mammalian and avian influenza viruses and were permissive to infection with these viruses. The progenitor cells differentiated into type I and II pneumocytes and type II pneumocytes also supported replication of influenza virus. These data provide new insights into the pathogenesis of influenza virus. Further, porcine progenitor epithelial cells described here may serve as a useful model in cellular therapy strategies for epithelial diseases.