Diffuse panbronchiolitis (DPB) is clinically and pathologically an independent entity and should be discriminated from the usual bronchiolitis obliterans. The lesions of 20 cases of DPB were serially sectioned and reconstruction was made focusing on the region from the terminal to the respiratory bronchioles. Morphological changes in the region of the respiratory bronchioles were clearly understood and were classified into three types by the presence and the size of the intraluminal granulation tissue. The walls of the respiratory bronchioles were thickened with cell infiltration and granulation tissue in all foci (28 in total), and 26 foci showed intraluminal granulation tissue whereas only 2 foci did not exhibit intraluminal plugs. Xanthoma cells were mostly observed in the interstitial tissue of the alveolar ducts, sacs, and septal walls distal to the stenotic sites as well as in the alveolar spaces in the marked cases.