Lung alveologenesis, formation of the alveolar region, allows sufficient gas exchange surface to be packed inside the chest cavity yet with orderly connection to the trachea. The real‐life alveolar region, however, bears little resemblance to idealized cartoons owing to its three‐dimensional nature, nonuniform shape, and mostly air‐filled void. This morphological complexity is matched by its cellular complexity—comprised of intermixed and often tangled cells of the epithelial, mesenchymal, endothelial, and immune lineages. Modern imaging, genetics, and genomics are shedding light on and updating traditional views of alveologenesis. Accordingly, this review describes a cell‐centric 3‐phase definition of alveologenesis and discusses its failure in diseases and possible reactivation during regeneration.