A 33-year-old male presented with a productive cough of yellowish sputum which he had had for several years and progressive dyspnea on exertion that had been present for one year. Physical examination on admission disclosed clubbing of the fingers, diffuse inspiratory crackles and some rhonchi on auscultation. Plain chest film showed diffuse fine nodular lesions in both lungs. Pulmonary function tests demonstrated obstructive ventilatory impairment with a positive bronchodilator response. A CT scan of the chest showed diffuse fine nodular infiltrations in both lung fields. Arterial blood gas analysis of the patient, while breathing room air, revealed mild hypoxemia. The histologic findings of an open lung biopsy specimen were compatible with a diagnosis of diffuse panbronchiolitis. The patient was treated with erythromycin and a bronchodilator, and was regularly followed at the outpatient department. In this report, clinical manifestations, diagnostic criteria and recent advances in the treatment of diffuse panbronchiolitis are discussed.