Environmental cum medical study was conducted in asbestos cement factory. The environment was evaluated for asbestos fiber by the methods recommended by BIS. Total 355 exposed and 312 suitably matched control workers were investigated by spirometer, Wright's peak flow meter and full sized postero-anterior chest radiograph. The levels of asbestos fiber were 2 to 3 times higher than TLV i.e. 2 f/ml in pipe cutting dept., crude fiber grinding inlet count was more than the ACGIH recommended limit i.e. 5 mpccf of air in pipe cutting dept. and silica mill. In the rest of the department, fiber level as well as dust particle count were below prescribed limit. The comparison of mean values of PFT parameters of workers with 16-20 years exposure history with control one was showing statistically significant decline in mean values of FVC only suggesting restrictive type of PFT impairment in this group of workers. But in workers with more than 20 years exposure, the mean values of all the parameters studied were reduced as compared to control one suggesting combined type of PFT impairment. When the mean values of PFT parameters of exposed smokers were compared with exposed non-smokers there was statistically no significant difference. This can be due to marginal contribution of smoking habit in impairment of PFT parameters of exposed smokers. The percentages of workers with parenchymal and pleural changes due to asbestos exposure were nearly two times more in more than 20 years exposure groups as compared to 11-20 years exposure groups. The parenchymal and pleural changes due to asbestos exposure were more common in exposed smokers as compared exposed non-smokers. However the detailed analysis revealed that if smoking contributes to the development of interstitial fibrosis, the contribution is a marginal one in comparison to the effect of asbestos dust exposure.