The pathogenesis of Cryptococcus neoformans pulmonary infection in the rat was studied after intratracheal inoculation. Lungs were examined at various times following infection for histopathology in conjunction with macrophage markers, proliferating cell nuclear antigen (PCNA), and capsular glucuronoxylomannan (GXM) antigen. Serum GXM, immunoglobulin M (IgM) and IgG titers and organ fungal burden were compared with pathological findings. C. neoformans organisms were in the lung parenchyma 2 h postinoculation, and GXM antigen was present in surrounding tissues shortly thereafter. Extrapulmonary dissemination occurred early in infection. Two phases of host cellular inflammatory response were discernible: early local macrophage recruitment at 2 to 4 days followed by granulomatous inflammation, which reached maximum intensity 14 days after infection. The granulomatous phase was preceded by lymphocyte influx with macrophage proliferation and maturation into epithelioid histiocytes; this was paralleled by a shift of yeasts from extracellular to intracellular spaces. Tissue IgG deposits, serum IgG to GXM, and localization of tissue GXM immunoreactivity to epithelioid cells were noted at 2 to 4 weeks. A 10-fold decrease in lung fungal burden occurred 25 days postinfection and was associated with resolving granulomas, fewer proliferating cells, and decreased tissue GXM. The present study demonstrates that (i) C. neoformans penetrates the lung parenchyma shortly after infection; (ii) immunocompetent rats control pulmonary cryptococcosis efficiently, with minimal extrapulmonary dissemination and low levels of serum GXM; and (iii) macrophage activation is likely to play a crucial role in limiting C. neoformans infection in the rat lung.