The alveolar stage of intra-uterine lung development was analyzed morphometrically in 18 fetal lambs at 112, 124, 142, or 148 (term) days of gestation. The right lungs were fixed at uniform distending pressure and the tissue embedded in Epon for light microscopy. Over the whole period, right lung volume (VL) increased more rapidly than body weight to reach a mean value of 185 cm3 at term. The increase in VL was greatest between 112 and 124 days gestation. Throughout the period of study the distal lung consisted of alveolar-like air-spaces lined by walls with a single capillary system. Despite this mature morphology, further differentiation took place as established by two independent measurements. First, interalveolar wall thickness decreased from 4.12 +/- .03 microns at 112 days to 2.55 +/- .02 microns at term. Secondly, alveolar surface area increased at a greater rate than lung volume (as VL 1.06), suggesting a moderate increase in surface complexity, but not a subdivision of existing air-spaces. This latter finding was supported by numerical density values which remained fairly constant. We conclude that throughout this period active growth involves the addition of alveolar units of basically similar size. This is a similar process to the one noted previously in postpneumonectomy compensatory growth.