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Summary: Spontaneous pneumothoraces due to lung cyst rupture afflict patients with the rare disease Birt-Hogg-Dubé (BHD) syndrome, which is caused by mutations of the tumor suppressor gene folliculin (FLCN). The underlying mechanism of the lung manifestations in BHD is unclear. We show that BHD lungs exhibit increased alveolar epithelial cell apoptosis and that Flcn deletion in mouse lung epithelium leads to cell apoptosis, alveolar enlargement, and an impairment of both epithelial barrier and overall lung function. We find that Flcn-null epithelial cell apoptosis is the result of impaired AMPK activation and increased cleaved caspase-3. AMPK activator LKB1 and E-cadherin are downregulated by Flcn loss and restored by its expression. Correspondingly, Flcn-null cell survival is rescued by the AMPK activator AICAR or constitutively active AMPK. AICAR also improves lung condition of Flcnf/f:SP-C-Cre mice. Our data suggest that lung cysts in BHD may result from an underlying defect in alveolar epithelial cell survival, attributable to FLCN regulation of the E-cadherin-LKB1-AMPK axis. : Mutations of the tumor suppressor gene FLCN in the rare disease Birt-Hogg-Dubé (BHD) cause lung collapse due to lung cyst rupture; however, the underlying mechanisms that guide these events are poorly understood. Here, Goncharova et al. describe the cellular and molecular mechanisms by which FLCN coordinates energy homeostasis and lung epithelial cell survival. This study provides insights into the specific role of FLCN in emphysematous lung changes, which may serve as a foundation for therapeutic approaches for the treatment of rare and common lung diseases such as BHD, COPD, and cystic fibrosis.