The primary lung bud originates from the foregut and develops into the bronchial tree by repetitive branching and outgrowing of the airway. The Sry related HMG box protein Sox2 is expressed in a cyclic manner during initiation and branching morphogenesis of the lung. It is highly expressed in non-branching regions and absent from branching regions, suggesting that downregulation of Sox2 is mandatory for airway epithelium to respond to branch inducing signals. Therefore, we developed transgenic mice that express a doxycycline inducible Sox2 in the airway epithelium. Continuous expression of Sox2 hampers the branching process resulting in a severe reduction of the number of airways. In addition, the bronchioli transiently go over into enlarged, alveolar-like airspaces, a pathology described as bronchiolization of alveoli. Furthermore, a substantial increase was observed of cGRP positive neuroendocrine cells and Delta Np63 isoform expressing (pre-) basal cells, which are both committed precursor-like cells. Thus, Sox2 prevents airways from branching and prematurely drives cells into committed progenitors, apparently rendering these committed progenitors unresponsive to branch inducing signals. However, Sox2 overexpression does not lead to a complete abrogation of the epithelial differentiation program.