Twenty patients with diffuse interstitial pulmonary disease diagnosed by open lung biopsy received combined prednisone/azathioprine therapy. Twelve patients demonstrated improvement with therapy. Each patient's clinical presentation, roentgenologic features and pathologic findings were correlated with their therapeutic response. Patients with an illness of one year's duration or less had a more favorable response to therapy than patients with a greater than two year duration of illness. Patients with associated extrathoracic abnormalities (anemia, glomerulitis, hepatopathy) exhibited a better therapeutic response that those with only pulmonary disease. The biopsy material from each patient was quantitatively graded on 20 morphologic variables. Statistical analysis using multiple linear regression revealed that a single variable, degree of interstitial fibrosis, was more that 90 per cent accurate in separating those responsive to therapy from those who failed to respond. Patients who respond to treatment had less interstitial fibrosis. Neither the amount of alveolar septal inflammation nor intra-alveolar cellular reaction was discriminatory in predicting response to therapy. A beneficial response to therapy was reflected in both improved lung volumes and gas exchange. Eight patients appeared to have a selective beneficial effect from azathioprine.