Background Interstitial lung disease frequently complicates systemic autoimmune disorders including scleroderma, idiopathic inflammatory myositis and mixed connective tissue disease, resulting in considerable morbidity and mortality. Based on the results of trials undertaken in scleroderma, cyclophosphamide is the standard of care for individuals with severe or progressive connective tissue disease-associated interstitial lung disease. Observational studies suggest that the anti-CD20 monoclonal antibody, rituximab is an effective rescue therapy in treatment of refractory connective tissue disease-associated interstitial lung disease, but it has not been studied as first-line therapy in clinical trials. Objectives To compare the safety and efficacy of rituximab against that of cyclophosphamide as treatment for individuals with severe, progressive interstitial lung disease associated with scleroderma, idiopathic inflammatory myositis or mixed connective tissue disease. Methods This was a Phase IIb, multicentre, randomised, double-blind, double-dummy study assessing the superiority of rituximab compared with cyclophosphamide, conducted in rheumatology or interstitial lung disease units at 11 UK centres. The study recruited individuals with extensive and/or progressive connective tissue disease-associated interstitial lung disease, excluding those with significant comorbidities, including airflow obstruction. Participants were randomised 1 : 1 to receive either rituximab 1 g given intravenously, twice at an interval of 2 weeks, or intravenous cyclophosphamide given monthly for 6 months at a dose of 600 mg/m2 body surface area. The primary end point for the study was the change in forced vital capacity at 24 weeks. Secondary end points included safety and tolerability, corticosteroid exposure, forced vital capacity change at 48 weeks and patient-reported quality of life. A cost-effectiveness analysis was undertaken to assess the impact of rituximab use in the United Kingdom National Health Service. Results One hundred and one subjects (70 females) with a mean age of 56.3 years were randomised; 51 to rituximab and 50 to cyclophosphamide. Ninety-seven were included in the modified intention-to-treat population for the primary and secondary efficacy analyses (49 in the rituximab group and 48 in the cyclophosphamide group). 38.6% had scleroderma, 44.6% idiopathic inflammatory myositis and 16.8% mixed connective tissue disease. Four subjects withdrew prior to the first dose of therapy (two in each arm). At 24 weeks, both rituximab and cyclophosphamide improved forced vital capacity from baseline [(mean ± standard deviation) 97 ± 234 and 99 ± 329 ml, respectively]. Using an adjusted mixed-effects model corrected for diagnosis and baseline forced vital capacity the difference in forced vital capacity at 24 weeks between rituximab and cyclophosphamide was −40 ml (95% CI −153 to 74 ml), p = 0.49. Other physiological and quality-of-life parameters improved in both arms following treatment but were not statistically significantly different between groups. Numerically fewer adverse events were reported by subjects receiving rituximab. Corticosteroid exposure over the 48 weeks of the trial was numerically less in the rituximab arm [13,291 (±14,657) mg of hydrocortisone equivalent per subject in the cyclophosphamide arm versus 11,469 (±10,041) mg per subject in the rituximab group; these differences did not reach statistical significance]. Limitations of the study include a disproportionate number of subjects being recruited from a single centre and insufficient subjects in each subgroup to determine whether there were treatment differences between individual connective tissue diseases. Based on the results of the trial, from a UK healthcare payer perspective, rituximab is more cost-effective than cyclophosphamide as a treatment for severe or progressive connective tissue disease-interstitial lung disease. Conclusions Rituximab improved forced vital capacity and patient-reported quality of life at 24 weeks but was not superior to cyclophosphamide. Rituximab should be considered as a therapeutic alternative to cyclophosphamide in individuals with connective tissue disease-associated interstitial lung disease requiring systemic therapy. Future work should explore the role of repeated dosing of rituximab and the use of rituximab earlier in the course of connective tissue disease-associated interstitial lung disease. Trial registration This trial is registered as ISRCTN16474148. Funding This award was funded by the National Institute for Health and Care Research (NIHR) Efficacy and Mechanism Evaluation Programme (NIHR award ref: 11/116/03) and is published in full in Efficacy and Mechanism Evaluation; Vol. 11, No. 4. See the NIHR Funding and Awards website for further award information.