Pulmonary and airway mechanics were studied in 8 patients with severe fibrosing alveolitis. In this disease, the number of functioning alveoli is probably considerably decreased, but static compliance was low even when related to the decreased lung volume. Lung recoil pressures toward full inflation were high but were not increased at and below functional residual capacity. Airway function was broadly normal for lung recoil pressure but supernormal for absolute lung volume. Analysis of model pressure-volume and maximal flow-volume curves showed that (1) these features could be produced simply by replacement of some units by indistensible fibrous tissue and retention of normal function of the surviving alveoli, respiratory muscles, chest wall, and airways; (2) increased lung tissue volume may prevent an increase in lung recoil pressures in the lower part of the vital capacity; and (3) the decreased lung volume could result in a decrease in upstream conductance without structural change in the airways. Measurement of lung compliance, even when corrected for the decreased lung volumes, may not distinguish between loss of units (lung "shrinkage") and abnormal distensibility of the functioning alveoli, but the latter is likely if maximal expiratory flow is excessive in relation to the lung volume expressed as per cent vital capacity.