Idiopathic pulmonary fibrosis (IPF) is a progressive disease of lung parenchyma characterized by a chronic inflammatory cellular infiltration and varying degrees of interstitial fibrosis. Current data indicate that the severity of fibrosis and the degree of cellularity determine, in part, the prognosis of IPF and the response to therapy. Whereas lung biopsy gives the best assessement of fibrosis and cellularity, physiologic studies are used to stage and monitor the disease process. To determine which physiologic studies correlate best with severity of fibrosis and degree of cellularity, these parameters were graded in lung biopsies of 23 patients with IPF and compared with a variety of physiologic studies. Although vital capacity, total lung capacity, and diffusing capacity are commonly used as objective monitors of the disease process, none of these parameters correlated with either the severity of fibrosis or the degree of cellularity in biopsy specimens. In contrast, almost all parameters of lung distensibility correlated with the morphologic assessment of degree of fibrosis; compliance had the best correlation. Parameters of distensibility, however, correlated poorly with the degree of cellularity. In comparison, gas exchange during exercise correlated with both morphologic parameters; the exercise-induced changes in arterial oxygen pressure per liter of oxygen consumed had a high correlation with the degree of fibrosis (r = 0.89; P less than 0.001) and correlated to a lesser extent with the degree of cellularity (r = 0.56; P = 0.009). In contrast, neither the resting arterial oxygen tension nor the arterial oxygen tension at maximal exercise correlated with the morphologic assessment of degree of fibrosis or the degree of cellularity. These morphologic-physiologic comparisons suggest that (a) lung volumes and diffusing capacity are poor monitors of both the degree of fibrosis and the degree of cellularity; (b) the fibrotic process contributes, at least in part, to parameters of lung distensibility, and both fibrosis and cellularity contribute to gas exchange alterations during exercise; and (c) parameters of lung distensibility and exercise-induced gas exchange alterations may be useful in staging the severity of disease in IPF.