We describe nine infants with a rare form of interstitial lung disease that is characterized by marked alveolar septal thickening, striking alveolar pneumocyte hyperplasia, and an alveolar exudate containing numerous macrophages and foci of eosinophilic debris. Primitive mesenchymal cells predominate within the widened alveolar septa; inflammatory cells are scant. This entity occurs exclusively in infants and very young children and differs from other types of interstitial pneumonia occurring in either children or adults. The histologic findings suggest that it may reflect slowly resolving or recurrent pneumonia superimposed on immature or abnormally developed lungs. The term chronic pneumonitis of infancy was chosen to reflect the unique occurrence of this lesion in young children and to emphasize its distinction from adult forms of interstitial pneumonia.