We report ultrastructural evidence of epithelial necrosis and alveolar collapse in a patient with usual interstitial pneumonia (UIP). These changes were focal and confined to small areas characterized histologically by aggregates of interstitial fibroblasts embedded within a myxoid stroma (fibroblastic foci). Ultrastructurally, the denuded epithelial basal lamina in these areas showed deep infoldings into the interstitium, and the luminal surfaces of the resultant clefts often were re-epithelialized. These findings suggest that the fibroblastic foci commonly seen in UIP represent sites of acute lung injury, and that alveolar collapse following epithelial necrosis is an important mechanism of lung remodeling. In addition to new insights regarding the pathogenesis of fibrosis in UIP, these observations may have important implications for assessing prognosis and selecting treatment strategies.