Abstract: This study aimed to define the cell populations involved in the granulomas. The granulomas of 16 patients with cryptogenic fibrosing alveolitis (five cases with the histological features of Non-specific Interstitial Pneumonial (NSIP), five with those of UIP and six cases of respiratory bronchiolitis) were examined histologically and by the use of immunohistochemical markers. Granulomas were discrete, compact and present only in alveolar spaces. The granulomas contained central clefts surrounded by mononuclear and multinucleated giant cells, both of which were CD68 positive. The cells outside the granulomas and those lining the adjacent alveolar walls were AE1/AE3 and CAM5.2 positive and CD68 negative. Our observations indicate that cholesterol cleft granulomas occur with high frequency in NSIP, are present within alveolar spaces which are lined exclusively by type II pneumocytes and that external to this the interstitium is fibrotic with accumulations of mast cells. It is our speculation that these are linked in a pathogenetic mechanism related to the progression of NSIP. The results also suggest that the mononuclear and multinucleated cells of cholesterol cleft granulomas are derived from the macrophage-mononuclear cell lineage. The alveolar lining cells are type II pneumocytes which do not contribute to the granuloma cell population. The alveolar lining cells are type II pneumocytes which do not contribute to the granuloma cell population.