Ovine pulmonary adenocarcinoma (OPA) is a transmissible lung cancer of sheep caused by Jaagsiekte sheep retrovirus (JSRV). The details of early events in the pathogenesis of OPA are not fully understood. For example, the identity of the JSRV target cell in the lung has not yet been determined. Mature OPA tumors express surfactant protein-C (SP-C) or Clara cell-specific protein (CCSP), which are specific markers of type II pneumocytes or Clara cells, respectively. However, it is unclear whether these are the cell types initially infected and transformed by JSRV or whether the virus targets stem cells in the lung that subsequently acquire a differentiated phenotype during tumor growth. To examine this question, JSRV-infected lung tissue from experimentally infected lambs was studied at early time points after infection. Single JSRV-infected cells were detectable 10 days postinfection in bronchiolar and alveolar regions. These infected cells were labeled with anti-SP-C or anti-CCSP antibodies, indicating that differentiated epithelial cells are early targets for JSRV infection in the ovine lung. In addition, undifferentiated cells that expressed neither SP-C nor CCSP were also found to express the JSRV Env protein. These results enhance the understanding of OPA pathogenesis and may have comparative relevance to human lung cancer, for which samples representing early stages of tumor growth are difficult to obtain.