There is an urgent need for innovative therapies targeting defective epithelial repair in chronic diseases like COPD. The mesenchymal niche is a critical regulator in epithelial stem cell activation, suggesting that their secreted factors are possible potent drug targets. Utilizing a proteomics-guided drug discovery strategy, we explored the lung fibroblast secretome to uncover impactful drug targets. Our lung organoid assays identified several regenerative ligands, with osteoglycin (OGN) showing the most profound effects. Transcriptomic analyses revealed that OGN enhances alveolar progenitor differentiation, detoxifies reactive oxygen species, and strengthens fibroblast-epithelial crosstalk. OGN expression was diminished in COPD patients and smoke-exposed mice. An active fragment of OGN (leucine-rich repeat regions 4-7) replicated full-length OGN's regenerative effects, significantly ameliorating elastase-induced lung injury in lung slices and improving lung function in vivo. These findings highlight OGN as a pivotal secreted protein for alveolar epithelial repair, positioning its active fragment as a promising therapeutic for COPD.