We present the clinical, radiologic, and pathologic findings in lung biopsies from seven infants with atypical neonatal lung disease. All seven infants presented with tachypnea, hypoxemia, and diffuse interstitial infiltrates with overinflated lungs on chest radiographs in the first month of life. Lung biopsies from all cases showed similar pathology, with expansion of the interstitium by spindle-shaped cells containing periodic acid-Schiff positive diastase labile material consistent with glycogen. Immunohistochemical staining showed these cells to be vimentin positive but negative for leucocyte common antigen, lysozyme, and other macrophage markers. Electron microscopy revealed primitive interstitial mesenchymal cells with few cytoplasmic organelles and abundant monoparticulate glycogen. Minimal or no glycogen was seen in the alveolar lining cells. Five cases were treated with pulse corticosteroids; hydroxychloroquine was added in one case. Six of seven infants have shown a favorable clinical outcome. One infant died from complications of extreme prematurity and bronchopulmonary dysplasia. Three cases that have been followed for at least 6 years have shown clinical resolution and radiographic improvement. We propose the term "pulmonary interstitial glycogenosis" of the neonate for this new entity to be differentiated from other forms of interstitial lung disease. Because abundant glycogen is not normally found in pulmonary interstitial cells, we postulate an abnormality in lung cytodifferentiation involving interstitial mesenchymal cells.