question: Background In the aftermath of Covid-19, some patients develop a fibrotic lung disease, i.e., post-COVID-19 lung disease (PCLD), for which we currently lack insights into pathogenesis, disease models, or treatment options. Method Using an AI-guided approach, we analyzed > 1000 human lung transcriptomic datasets associated with various lung conditions using two viral pandemic signatures (ViP and sViP) and one covid lung-derived signature. Upon identifying similarities between COVID-19 and idiopathic pulmonary fibrosis (IPF), we subsequently dissected the basis for such similarity from molecular, cytopathic, and immunologic perspectives using a panel of IPF-specific gene signatures, alongside signatures of alveolar type II (AT2) cytopathies and of prognostic monocyte-driven processes that are known drivers of IPF. Transcriptome-derived findings were used to construct protein-protein interaction (PPI) network to identify the major triggers of AT2 dysfunction. Key findings were validated in hamster and human adult lung organoid (ALO) pre-clinical models of COVID-19 using immunohistochemistry and qPCR. Findings COVID-19 resembles IPF at a fundamental level; it recapitulates the gene expression patterns (ViP and IPF signatures), cytokine storm (IL15-centric) and the AT2 cytopathic changes, e.g., injury, DNA damage, arrest in a transient, damage-induced progenitor state, and senescence-associated secretory phenotype (SASP). These immunocytopathic features were induced in pre-clinical COVID models (ALO and hamster) and reversed with effective anti-CoV-2 therapeutics in hamsters. PPI-network analyses pinpointed ER stress as one of the shared early triggers of both diseases, and IHC studies validated the same in the lungs of deceased subjects with COVID-19 and SARS-CoV-2-challenged hamster lungs. Lungs from tg-mice, in which ER stress is induced specifically in the AT2 cells, faithfully recapitulate the host immune response and alveolar cytopathic changes that are induced by SARS-CoV-2. Interpretation Like IPF, COVID-19 may be driven by injury-induced ER stress that culminates into progenitor state arrest and SASP in AT2 cells. The ViP signatures in monocytes may be key determinants of prognosis. The insights, signatures, disease models identified here are likely to spur the development of therapies for patients with IPF and other fibrotic interstitial lung disease. Funding This work was supported by the National Institutes for Health grants R01-GM138385 and AI155696 and funding from the Tobacco-Related disease Research Program (R01RG3780). One Sentence Summary Severe COVID-19 triggers cellular processes seen in fibrosing Interstitial Lung Disease