We examined the incidence and association of bronchiolization of the alveoli with non-small cell lung cancer in lung resection specimens from 2 patient groups: those with non-small cell lung cancer and those diagnosed with a variety of non-neoplastic lung conditions. We observed marked variation in bronchiolization of the alveoli morphology ranging from normal to severely atypical and developed a classification scheme based on growth pattern, cell number and cytologic criteria. Patterns of differentiation, proliferation and growth factor receptor and oncogene expression were studied using immuno-histochemical and in situ hybridization techniques. While low-grade (0-I) bronchiolization of the alveoli lesions demonstrated markers similar to normal bronchiolar epithelium, a significant decrease in the Clara cell 10 kDa protein and tubulin and an increase in surfactant protein-A expression were observed in high-grade (II-III) lesions. Focal p53 expression was detected in 2 high-grade lesions, while c-myc mRNA and cJun protein were observed in all grades. No correlation was observed between bronchiolization of the alveoli incidence and histologic tumor type. A comparison of marker expression in lesions and tumors from the same case revealed a negative correlation between cytokeratin-14 and c-erbB-2 immuno-reactivity. Only one bronchialization of the alveoli lesion was found in the non-neoplastic patient group. We conclude that up to 12% of non-small cell lung cancer resection specimens contain bronchiolization of the alveoli lesions which exhibit altered morphology and patterns of differentiation.