Lone cryptogenic fibrosing alveolitis (CFA) is histologically identical to fibrosing alveolitis associated with systemic sclerosis (FASSc), but it has a much worse prognosis after matching for disease severity at presentation. Thin-section CT scanning (CT) provides a reproducible method of quantifying the morphologic extent of fibrosing alveolitis. The aim of this study was to gain insights into contrasting pathophysiologic mechanisms in the two diseases by comparing patterns of functional impairment after matching for extent of disease on CT, demographic factors, smoking history, and concurrent treatment. Patients with emphysema on CT (n = 16) and patients with FASSc with overt pulmonary hypertension (n = 5) were excluded; 111 patients were studied (CFA, n = 54; FASSc, n = 57). Patients with CFA were distinguished by more severe functional impairment and more extensive disease on CT (40.1 versus 22.1%, p < 0.00005). On multivariate analysis, patients with CFA had greater reduction in arterial P(O2) (p < 0.0005), wider AaP(O2) (p < 0.0005), greater oxygen desaturation on maximal exercise (p < 0.03), and higher dyspnea scores (p < 0.02) than did patients with FASSc after controlling for extent of disease on CT and other covariates. Measures of lung volume and gas transfer did not differ independently between CFA and FASSc. These findings persisted in subanalyses of patients with limited disease, extensive disease, histologic confirmation of fibrosing alveolitis, and with the reinclusion of patients with emphysema and pulmonary hypertension. The patterns of functional impairment were indicative of more severe ventilation-perfusion mismatch or anatomic shunting in CFA after adjustment for disease extent; we speculate that perfusion of poorly ventilated lung parenchyma in CFA occurs through new vessels formed in areas of intense inflammation. This mechanism may contribute to the greater mortality of patients with CFA than of patients with FASSc because of the deleterious effects of hypoxia on concurrent cardiac disease.