`Fibrosing alveolitis' refers to a broad general category of disease characterized by an inflammatory process in the lung beyond the terminal bronchiole having as its essential features (1) cellular thickening of the alveolar walls with a strong tendency to fibrosis, and (2) the presence of large mononuclear cells, presumably of alveolar origin, within the alveolar spaces. Sixteen cases in which lung biopsies conformed to this general pattern and whose course is known thereafter for at least two years or until death have been reviewed. There was an inverse relationship between the degree of alveolar wall thickening and the number of large mononuclear cells of granular type in the alveolar spaces. Corticosteroid treatment suppressed symptoms and signs in a few of the patients whose biopsy specimens showed only slight alveolar wall thickening and many intra-alveolar mononuclear cells but in none of those with much thickened alveolar walls. More or less prolonged remissions of progression of the disease were observed in a few patients, both with and without prominent alveolar wall thickening. There was no evident relationship between the histology at the time of biopsy and the total duration of the disease from onset to death.