Bronchioalveolar stem cells (BASCs) are a potential source for lung regeneration, but direct in vivo evidence for a multipotential lineage contribution during homeostasis and disease is critically missing, since specific genetic labeling of BASCs has not been possible. We developed a novel cell tracing approach based on intein‐mediated assembly of newly engineered split‐effectors, allowing selective targeting of dual‐marker expressing BASCs in the mouse lung. RNA sequencing of isolated BASCs demonstrates that BASCs show a distinct transcriptional profile, characterized by co‐expression of bronchiolar and alveolar epithelial genes. We found that BASCs generate the majority of distal lung airway cells after bronchiolar damage but only moderately contribute to cellular turnover under homeostatic conditions. Importantly, DTA‐mediated ablation of BASCs compromised proper regeneration of distal airways. The study defines BASCs as crucial components of the lung repair machinery and provides a paradigmatic example for the detection and manipulation of stem cells that cannot be recognized by a single marker alone.