During development, quiescent airway basal stem cells are derived from proliferative primordial progenitors through the cell-cycle slowdown. In contrast, basal cells contribute to adult tissue regeneration by shifting from slow cycling to proliferating and subsequently back to slow cycling. Although sustained proliferation results in tumorigenesis, the molecular mechanisms regulating these transitions remain unknown. Using temporal single-cell transcriptomics of developing murine airway progenitors and genetic validation experiments, we found that TGF-β signaling decelerated cell cycle by inhibiting Id2 and contributed to slow-cycling basal cell specification during development. In adult tissue regeneration, reduced TGF-β signaling restored Id2 expression and initiated regeneration. Id2 overexpression and Tgfbr2 knockout enhanced epithelial proliferation; however, persistent Id2 expression drove basal cell hyperplasia that resembled a precancerous state. Together, the TGF-β-Id2 axis commonly regulates the proliferation transitions in basal cells during development and regeneration, and its fine-tuning is critical for normal regeneration while avoiding basal cell hyperplasia. Keywords: ID2; TGFβ pathway; airway regeneration; cellular quiescence; progenitors; pulmonary tissue development; stem cell specification; tissue stem cells; trachea.