The basic helix-loop-helix transcription factor achaete-scute homologue-1 (ASH1) plays a critical role in regulating the neuroendocrine (NE) phenotype in normal and neoplastic lung. Transgenic (TG) mice that constitutively express human ASH1 (hASH1) under control of the Clara cell 10-kDa protein (CC10) promoter in non-NE airway lining cells display progressive epithelial hyperplasia and bronchiolar metaplasia or bronchiolization of the alveoli (BOA). However, little is known about the involvement of hASH1 in regeneration of the conducting airway. In this study, we investigated the impact of hASH1 on airway cell injury and repair in the TG mice following an intraperitoneal injection of naphthalene, which specifically ablates bronchiolar Clara cells and induces pulmonary NE cell hyperplasia. We discovered an overall attenuation of NE maturation coupled with increased proliferation in TG mice during post-naphthalene repair. In addition, BOA lesions revealed enhanced epithelial cell proliferation while preserving Clara cell markers CC10 and the principal naphthalene-metabolizing enzyme cytochrome P4502F2. These data suggest that ASH1 may play an important role in maintaining a progenitor phenotype that promotes renewal of both NE and epithelial cells. Moreover, ASH1 may propagate a stem cell microenvironment in BOA where epithelium becomes resistant to naphthalene toxicity.