Persistent interstitial pulmonary emphysema (PIPE) is an uncommon complication of premature infants suffering from hyaline membrane disease who have been treated with mechanical ventilation. The presumed mechanism for the development of the disease is via a break in the bronchioalveolar system that allows air to escape into the interstitium. We report a case of a 9-week-old child who developed the localized form of the disease and underwent a lobectomy. Immunohistochemical stains helped to demonstrate the communication between the airway system and interstitium. This report strengthens the theory that the disease develops from airway rupture at the alveolar level.