Of 41 cases of cystic lungs in children, 21 were found by microscopy to be due to congenital cystic malformation. In most of the remainder, chronic inflammation and fibrosis precluded differentiation from postinflammatory pneumatocele. A few were intermediate between cystic malformation and congenital lobar emphysema. The cystic malformations were 17 surgical and four necropsy specimens, and two thirds of the patients were under 1 year old. The condition was unilobar, and the cysts were thin-walled, up to 8 cm in diameter, multiple or multilocular, and microscopically resembled proliferated, dilated bronchioles communicating with alveoli. There was a wide range of size, shape, and number of cysts, and no sharp demarcation from adenomatoid malformation in stillborn infants. Thus, bronchiolar malformations fall into two overlapping clinicopathologic groups: (1) adenomatoid malformation in edematous stillborn and premature infants with predominantly solid lobes showing more epithelial proliferation and immature terminal airways and (2) cystic malformation in term infants and children with predominantly cystic lobes and interspersed mature alveoli.