The lung is a primary target of cell injury in patients receiving cytotoxic drugs, and in many cases the reaction is severe enough to produce diffuse pulmonary fibrosis. Although many different agents may damage the lung, the patterns of cellular injury and repair are relatively constant. Using bleomycin toxicity as an example, it has been shown that, after IV injection, the selective site of lung injury is the vascular endothelium; this is followed by the accumulation of interstitial edema and later by necrosis of Type I epithelial cells. In normal repair, rapid proliferation of Type II cells, followed by differentiation to Type I, restores the epithelial surface without fibrosis. However, after bleomycin, Type II cell proliferation is frequently followed by abnormal differentiation to a metaplastic form of epithelium. Fibroblast proliferation accompanies this abnormal epithelial response which is related either to selective retention of bleomycin by epithelial cells or to the toxic effects of administering more drug at the time of Type II cell division. It is concluded that diffuse interstitial fibrosis results from prolonged disturbance of the normal epithelial-mesenchymal interrelationships at the alveolar wall. Disruption of the fibroblastic control system by extensive epithelial necrosis or by delayed or inappropriate repair may be the key factor in instigating fibroblast proliferation and subsequent deposition of collagen. This mechanism may account for the development of diffuse fibrosis or fibrosing alveolitis in response to a variety of pulmonary toxins.