Background Interstitial lung diseases (ILDs) are a heterogeneous group of disorders with wide spectrum whose accurate diagnosis and proper treatment pose a great challenge. Our study is focused on safety and efficacy of bronchoscopy with transbronchial lung biopsy (TBLB) in patients with ILD. Methodology A prospective observational study of 68 patients was conducted in our tertiary care center. Diagnostic role, yield, and safety of TBLB in ILD were studied by comparing with high-resolution computed tomography (HRCT) patterns and histopathology. Results A total of 136 cases of ILD were referred to us in the said period. Of these, 75 patients underwent bronchoscopy and 68 underwent bronchoscopy with TBLB. Among them, the most common HRCT pattern was chronic hypersensitivity pneumonitis (HP) 47.06%. ILDs were subdivided as, with known cause (13.24%), 64.71% granulomatous ILDs (17.65% sarcoidosis and 47.06% chronic HP) and 22.06% idiopathic interstitial pneumonitis IIP). Pathological diagnosis of ILD was obtained in 54.41%. Based on etiological classification, pathological diagnosis was obtained in 46.67% IIP, 11.11% ILD with known cause, and 65.9% granulomatous ILD. A total of 16.2% patients had complications with no mortality. Complications associated with TBLB in IIP with non-IIP cases as well as usual interstitial pneumonia (UIP) with non-UIP cases were statistically significant. Conclusion Bronchoscopy was safe and well tolerated. Most important limiting factor was awareness about bronchoscopy and unwillingness for the procedure on understanding the risks of the same in ILD. TBLB is a useful diagnostic procedure for our ILDs as a part of multidisciplinary approach with total yield of 54.41% and more yield in chronic HP and sarcoidosis. We experienced a low rate of complications.