Autophagy is a highly conserved process primarily known for its role in cellular adaptation to nutritional stress. This bulk protein degradation pathway relocates nutrients during starvation. Recent studies, however, have revealed essential roles of autophagy in various organs under normal conditions. Especially, autophagy is now recognized as the pathway responsible for the elimination of damaged proteins resulting from environmental stress. Lungs are constantly exposed to high oxygen tension and environmental chemicals. To investigate the importance of autophagy in lung physiology, we used an inducible system to ablate Atg7 expression, which is a protein essential for autophagy, in the respiratory epithelial cells of adult mice. We found that Atg7 deficiency caused swelling of bronchiolar epithelial cells and accumulation of p62, which links substrate proteins to the autophagy machinery. Bronchiolar epithelial cells, isolated by micro-dissection of lung tissues, had elevated expression of cytoprotective genes that are typically activated by Nrf2. Interestingly, Atg7-deficient lungs displayed hyper-responsiveness to cholinergic stimuli without apparent inflammatory signs. Swollen bronchiolar epithelial cells may have lead to mechanical airway constriction and lowered the threshold for the increase of airway resistance. This study demonstrates the critical role of autophagy in the lungs for the maintenance of pulmonary homeostasis.