Rats exposed to various airborne dusts developed a condition identical to pulmonary alveolar proteinosis as seen in man. The experimental condition developed through a stage of endogenous lipid pneumonia, characterized by numerous large foamy macrophages widely distributed throughout the lung. These cells broke down to release a finely granular material which finally condensed to reproduce the appearances of alveolar proteinosis. Electron microscopy indicated that the alveolar material was produced by type II pneumocytes and may therefore represent pulmonary surfactant. A study of the dust-handling mechanism showed that in affected animals macrophage mobility was seriously impaired.