This review begins with the classic physiologic syndrome of interstitial lung disease (ILD) described in established asbestosis in the 1950s: reduced VC and pulmonary compliance, maintenance of airflow (measured indirectly), decreased diffusing capacity (a laborious undertaking in those years), and hyperventilation, increased dead space (VD/VT), and desaturation on exercise. Small airways dysfunction (SAD) was recognized in the 1960s and 1970s as the physiologic counterpart of the early peripheral bronchiolar inflammatory and fibrotic narrowing reported in experimental animals and in asbestos workers. SAD is nonspecific and is often overshadowed by more severe obstruction caused by smoking or by the countervailing effects of increased lung recoil caused by interstitial fibrosis. Airtrapping secondary to SAD may explain some of the reduction in VC in asbestos exposed workers whose FEV1/FVC is normal. There may be a greater frequency of obstructive airways disease in asbestos workers who smoke than in other smokers, suggesting an interaction between these two noxious inhalants. An interaction is seen in the greater frequency and severity of radiographic asbestosis in smokers at equivalent durations of exposure and in the greater reduction in FVC in smokers at equivalent ILO profusion scores. The functional importance of PT is well documented by lower values for FVC at equivalent profusions of parenchymal disease. This is true of circumscribed PT but much more so of diffuse PT, which can occasionally result in ventilatory failure and death. Incremental exercise testing often reveals evidence of excessive ventilation and abnormal gas exchange (VD/VT) attributable to ILD, when standard tests of pulmonary function and chest radiography are normal. These abnormalities help explain dyspnea in such patients.