To understand better the pathogenesis of peripherally occurring well-differentiated adenocarcinoma of the lung in relation to alveolar epithelial hyperplasia (AEH), immunohistochemical, morphometric, and electron microscopic studies were done on surgical pathologically examined cases of lung cancer. Cases with interstitial pulmonary fibrosis were excluded so that the effects of diffuse scarring of the lung on the development of neoplasia were eliminated. Of 70 specimens with various types of pulmonary carcinomas, 15 were found to have coexistent typical or atypical AEH lesions. No area of transition from AEH to neoplasm was found. The immunohistochemistry studies showed significant differences in the reactions of carcinoembryonic and blood group antigens between typical and atypical AEH lesions, but no significant differences could be obtained between atypical AEH lesions and adenocarcinoma. However, the morphometry of the mean nuclear areas revealed a highly significant difference between atypical AEH lesions and adenocarcinoma. Electron microscopy showed many Clara granules in atypical AEH cells. The results did not prove that AEH lesions are precancerous, but the presence of Clara granules in atypical AEH cells raises speculation on the histogenetic relationship between AEH and pulmonary adenocarcinoma.