Abstract Telomere dysfunction is associated with multiple fibrotic lung processes, including chronic lung allograft dysfunction (CLAD)—the major limitation to long-term survival following lung transplantation. Although shorter donor telomere lengths are associated with an increased risk of CLAD, it is unknown whether short telomeres are a cause or consequence of CLAD pathology. Our objective was to test whether telomere dysfunction contributes to the pathologic changes observed in CLAD. Histopathologic and molecular analysis of human CLAD lungs demonstrated shortened telomeres in lung epithelial cells quantified by teloFISH, increased numbers of surfactant protein C immunoreactive type II alveolar epithelial cells, and increased expression of senescence markers (β-galactosidase, p16, p53, and p21) in lung epithelial cells. TRF1F/F (telomere repeat binding factor 1 flox/flox) mice were crossed with tamoxifen-inducible SCGB1a1-cre mice to generate SCGB1a1-creTRF1F/F mice. Following 9 months of tamoxifen-induced deletion of TRF1 in club cells, mice developed mixed obstructive and restrictive lung physiology, small airway obliteration on microcomputed tomography, a fourfold decrease in telomere length in airway epithelial cells, collagen deposition around bronchioles and adjacent lung parenchyma, increased type II aveolar epithelial cell numbers, expression of senescence-associated β-galactosidase in epithelial cells, and decreased SCGB1a1 expression in airway epithelial cells. These findings demonstrate that telomere dysfunction isolated to airway epithelial cells leads to airway-centric lung remodeling and fibrosis similar to that observed in patients with CLAD and suggest that lung epithelial cell telomere dysfunction may be a molecular driver of CLAD.