Ischemia/reperfusion-induced edema (IRE), one of the most significant causes of mortality after lung transplantation, can be mimicked ex vivo in isolated perfused mouse lungs (IPL). Transient receptor potential vanilloid 4 (TRPV4) is a nonselective cation channel studied in endothelium; however, its role in the lung epithelium remains elusive. Here, we show enhanced IRE in TRPV4-deficient (TRPV4(-/-)) IPL compared with that of WT controls, indicating a protective role of TRPV4 in maintenance of the alveolar epithelial barrier. By immunohistochemistry, mRNA profiling, and electrophysiological characterization, we detected TRPV4 in bronchial epithelium, alveolar epithelial type I (ATI), and alveolar epithelial type II (ATII) cells. Genetic ablation of TRPV4 resulted in reduced expression of the water-conducting aqua porin-5 (AQP-5) channel in ATI cells. Migration of TRPV4(-)(/-) ATI cells was reduced, and cell barrier function was impaired. Analysis of isolated primary TRPV4(-/-) ATII cells revealed a reduced expression of surfactant protein C, and the TRPV4 activator GSK1016790A induced increases in current densities only in WT ATII cells. Moreover, TRPV4(-/-) lungs of adult mice developed significantly larger mean chord lengths and altered lung function compared with WT lungs. Therefore, our data illustrate essential functions of TRPV4 channels in alveolar epithelial cells and in protection from edema formation.