A case of intravascular and sclerosing bronchioloalveolar tumor (IVSBAT) studied by light microscopy and electron microscopy is reported. Light microscopy revealed typical nodules composed of plump tumor cells in the peripheral regions and central areas of hyalinization. Histochemical examination revealed that the matrix material contained hyaluronic acid. Around the periphery of the nodules, tumor cells and matrix material were observed within the alveolar walls. Tumor was also present in numerous small bood vessels and lymphatics. Electron microscopy demonstrated that the tumor cells were polygonal or elongated and were connected by small junctions. The cytoplasm was filled with fine filaments, and dense bodies typical of those seen in smooth muscle cells were occasionally observed. Pinocytotic vesicles and basement membranes were also present. Some cells formed vessel-like lumina. Rows of tumor cells were identified within alveolar walls where they at first proliferated without disturbing the overall architecture; increasing numbers of tumor cells and matrix material gradually widened the alveolar walls, and the tumor finally expanded into the alveolar spaces. The ultrastructural features of the tumor cells are consistent with an origin form pericytes or endothelial cells; we suggest that IVSBAT is actually a sarcoma of vasoformative cells which arises within the alveolar walls, perhaps in multicentric fashion. We propose that the tumor be renamed "sclerosing interstitial vascular sarcoma".