In the human foetus, light and electron microscope studies show a gradual transition between the columnar or cuboidal epithelium of early foetal lung and the attenuated epithelial lining of fully developed alveoli, starting during the fifth month of gestation; the first contacts between capillaries and epithelial cells are established at that time. During the sixth month, epithelial cells differentiate into two morphologically different types; type I cells have a small perinuclear body with long thin cytoplasmic extensions, and type II cells contain lamellar bodies, as in adult lung. Relatively undifferentiated areas can persist longer in some areas. These data are compared with observations of foetal lung development in other species (mouse and sheep).