Left lung allografts were performed in ten mongrel dogs. No immunosuppressives were given. Serial biopsies of the transplanted lungs were excised for light and electron microscopy before and after transplantation. All biopsies for electron microscopy were taken in the inflated state. Alveolar surfactant activity was determined on a portion by the indirect bubble stability method and the remainder was fixed for light (toluidine blue) and ultrastructural examination. Ultrastructural alterations in the homografted lungs were noted as early as the first day. These changes occurred earlier than previously described histologic characterizations of the pulmonary allograft rejection sequences. Correlations of the morphologic findings with surfactant activity determinations could not be made until rejection was advanced.