During its development that begins in intrauterine life, the lung is transformed from a simple epithelial lined sac that emerges from the foregut into a complex arrangement of blood vessels, airways, and alveoli that make up the mature lung structure. This remarkable transformation that continues for several years postnatally, is achieved by the influence of several genes, transcription factors, growth factors and hormones upon the cells and proteins of the lung bud. A seminal event in this process is the formation of the air-blood barrier within the alveolar wall, an evolutionary modification that permits independent air-breathing existence in mammals. Molecular biological techniques have enabled elucidation of the mechanistic pathways contributing to alveologenesis and have provided probable molecular bases for examples of impaired alveologenesis encountered by the paediatric pathologist.