Alveolar macrophages (AMs) are crucial for maintaining normal lung function. They are abundant in lung cancer tissues, but their pathophysiological significance remains unknown. Here we show, using an orthotopic murine lung cancer model and human carcinoma samples, that AMs support cancer cell proliferation and thus contribute to unfavourable outcome. Inhibin beta A (INHBA) expression is upregulated in AMs under tumor-bearing conditions, leading to the secretion of activin A, a homodimer of INHBA. Accordingly, follistatin, an antagonist of activin A is able to inhibit lung cancer cell proliferation. Single-cell RNA sequence analysis identifies a characteristic subset of AMs specifically induced in the tumor environment that are abundant in INHBA, and distinct from INHBA-expressing AMs in normal lungs. Moreover, postnatal deletion of INHBA/activin A could limit tumor growth in experimental models. Collectively, our findings demonstrate the critical pathological role of activin A-producing AMs in tumorigenesis, and provides means to clearly distinguish them from their healthy counterparts.