Allogeneic hematopoietic stem cell transplantation (SCT) is the only curative therapeutic option for a number of malignant and non-malignant conditions, but the success of this treatment strategy is limited by several side effects. Diffuse lung injury is a major complication of SCT that responds poorly to standard treatment and significantly contributes to transplant related morbidity and mortality. Lung injury occurs in both acute and chronic forms and can be either infectious or non-infectious in nature. Acute, non-infectious lung injury following SCT has been defined as idiopathic pneumonia syndrome (IPS). This review will outline the clinical spectrum, risk factors, and pathogeneses of IPS and discuss how current approaches to therapy are being influenced by insights generated using animal models of disease.