Three cancer patients developed pulmonary distress during treatment with bieomycin. Light microscopic examination of lung tissue obtained by percutaneous biopsy revealed a diffuse alveolar damage progressing to interstitial pneumonitis. With electron microscopy, interstitial adema and collagen deposition, accumulation of fibroblasts, disappearance of type I, and proliferation of type II alveolar epithelial cells were noted. Alveoli contained proteinaceous material and a mixture of macrophages and type II cells. A peculiar alteration was noted in some type II cells consisting of shortening of the microvilli and extrusion of cytoplasmic lamellar bodies with possible surfactant impairment. These findings are consistent with the drug's effect upon the alveolar epithelium. Bleomycin, therefore, can be considered another etiologic agent of iatrogenic interstitial pneumonitis.