Accumulating evidence illustrates a fundamental role for mitochondria in lung alveolar type 2 epithelial cell (AEC2) dysfunction in the pathogenesis of idiopathic pulmonary fibrosis. However, the role of mitochondrial fusion in AEC2 function and lung fibrosis development remains unknown. Here we report that the absence of the mitochondrial fusion proteins mitofusin1 (MFN1) and mitofusin2 (MFN2) in murine AEC2 cells leads to morbidity and mortality associated with spontaneous lung fibrosis. We uncover a crucial role for MFN1 and MFN2 in the production of surfactant lipids with MFN1 and MFN2 regulating the synthesis of phospholipids and cholesterol in AEC2 cells. Loss of MFN1, MFN2 or inhibiting lipid synthesis via fatty acid synthase deficiency in AEC2 cells exacerbates bleomycin-induced lung fibrosis. We propose a tenet that mitochondrial fusion and lipid metabolism are tightly linked to regulate AEC2 cell injury and subsequent fibrotic remodeling in the lung.