Inhalation of chrysotile asbestos fibers causes interstitial lung disease in animals and man. For examination of the anatomic localization of inhaled asbestos and its relationship to alveolar tissue responses of the lung during and after chronic exposure, male and female Fischer 344 rats were exposed to aerosolized chrysotile for 7 hours/day, 5 days/week for 3 or 12 months. A number of exposed animals were kept in filtered air for an additional 12 months. Lung tissue from randomly selected animals in each group was studied by morphometric analysis of electron micrographs. Our findings show that during exposure to asbestos fibers, macrophages and alveolar epithelial cells contain statistically significant amounts of asbestos and are associated with histologic changes indicating marked epithelial injury. Increased amounts of fibers are also localized in the lung interstitium with continued exposure to asbestos and are associated with a progressive interstitial fibrotic reaction. Following cessation of exposure, macrophages and epithelial cells are cleared of fibers and resolve toward normal proportions. However, significant clearance of fibers from the lung interstitium does not occur after cessation of exposure, and there is a continuing process of fibrogenesis. These data provide new insights related to the pathogenesis of diffuse lung disease and the role each alveolar tissue compartment plays in the early and late phases of the disease.