In 19 cases of congenital cystic disease of the lung, the cysts were always multiple or multilocular and thin-walled. Their walls resembled those of bronchioles with surrounding patches of smooth muscle without cartilage. The cysts communicated with bronchi proximally and with alveoli distally suggesting bronchiolectasis. However, there was also proliferation of bronchiolar structures, shown by their increase in number and by papillary overgrowth of the lining epithelium. Bronchiolar proliferation is also a feature of adenomatoid malformation. The 2 terms therefore, may possibly apply to different degrees of the same anomaly, a severe one producing stillbirth or neonatal death, and a milder one allowing survival long enough for successful surgical resection. One third of the children were full-term neonates, one third were aged 1 to 12 mth, and one third 1 to 10 yr. Fifteen of the specimens were surgical and 4 were necropsies. Half also had emphysema in the affected lobe, and 4 had associated extra lobar sequestration. None was associated with cysts in other organs. Radiologically and macroscopically, the overdistended lobe sometimes mimicked congenital lobar emphysema. All cases with more than focal chronic inflammation were omitted, in order to exclude post inflammatory pneumatoceles. Intrapulmonary bronchogenic cysts and intrapulmonary sequestrations differed in being usually single, often having cartilage and inflammatory fibrosis in their walls, and not having alveoli budding off the cyst. In 19 cases of congenital cystic disease of the lung, the cysts were always multiple or multilocular and thin-walled. Their walls resembled those of bronchioles with surrounding patches of smooth muscle without cartilage. The cysts communicated with bronchi proximally and with alveoli distally suggesting bronchiolectasis. However, there was also proliferation of bronchiolar structures, shown by their increase in number and by papillary overgrowth of the lining epithelium. Bronchiolar proliferation is also a feature of adenomatoid malformation. The 2 terms therefore, may possibly apply to different degrees of the same anomaly, a severe one producing stillbirth or neonatal death, and a milder one allowing survival long enough for successful surgical resection. One third of the children were full-term neonates, one third were aged 1 to 12 mth, and one third 1 to 10 yr. Fifteen of the specimens were surgical and 4 were necropsies. Half also had emphysema in the affected lobe, and 4 had associated extra lobar sequestration. None was associated with cysts in other organs. Radiologically and macroscopically, the overdistended lobe sometimes mimicked congenital lobar emphysema. All cases with more than focal chronic inflammation were omitted, in order to exclude post inflammatory pneumatoceles. Intrapulmonary bronchogenic cysts and intrapulmonary sequestrations differed in being usually single, often having cartilage and inflammatory fibrosis in their walls, and not having alveoli budding off the cyst.