In 1956, LIEBOW and HUBBEL defined pulmonary fibrosing haemangioma as a marked vascular proliferation with a marked tendency to fibrosis, papillary vegetations, extensive histiocytic infiltration and haemorrhages at various stages of organisation. More than 70 cases have been reported since. This lesion occurs most often in the middle aged woman. It is usually asymptomatic or may present as haemoptysis. Radiologically, it takes the form of a well-limited round homogeneous opacity and the prognosis is excellent after excision. The case reported here fell fully within this context and had the special feature of intrascissural tumour development resulting in an unusual radiological appearance which initially suggested a diagnosis of encysted pleural effusion. However the solid nature of the opacity being confirmed by CT scan, it was excised surgically. Its nature was revealed by histological examination. A detailed review of the literature is undertaken and changes in the histopathological concept of this type of lesion discussed. Previously classified amongst inflammatory pseudo-tumours, it is now considered to be a tumour proliferation which, on the basis of current data from electron microscopy and histochemistry, is felt by some to be of vascular origin but by the majority to be of epithelial origin, apparently developing from immature type II pneumocytes. The name "benign fibrosing pneumocytoma" suggested by CHAN would seem now more appropriate.