Pulmonary surfactant is essential to maintain alveolar patency, and invariably fatal neonatal lung disease has been recognized to involve mutations in the genes encoding surfactant protein-B or ATP-binding cassette transporter family member ABCA3. The lipid transporter ABCA3 targets surfactant phospholipids to lamellar bodies that are lysosomal-derived organelles of alveolar type II cells. ABCA3-/- mice have grossly reduced surfactant phosphatidyl glycerol levels and die of respiratory failure soon after birth. We studied lung biopsy samples of two siblings with a novel homozygous ABCA3 mutation at nucleotide position 578 (c.578C>G), leading to a Pro193Arg amino-acid exchange, who died at 55 and 105 days of age. Light microscopy revealed thickened alveolar septa with abundant myxoid interstitial matrix, marked hyperplasia of type II pneumocytes, desquamation of alveolar macrophages and focal alveolar proteinosis. Surfactant protein-B was detected by immunohistochemistry after antigen retrieval. Transmission electron microscopy showed rare cytoplasmic inclusions with concentric membranes and eccentrically placed electron-dense aggregates. These 'fried-egg'-appearing lamellar bodies differed both from normal lamellar bodies and the larger, poorly formed composite bodies with multiple vesicular inclusions observed in surfactant protein-B deficiency. In conclusion, our findings underscore that the implications of interstitial lung disease in infant lungs differ from those in adults. In infants with a desquamative interstitial pneumonitis pattern, surfactant or ABCA3 mutations should be evaluated. Importantly, these findings support the notion that electron microscopy is useful in distinguishing between surfactant protein-B and ABCA3 deficiency, and has an important role in evaluating biopsies or autopsies of term infants with unexplained severe respiratory failure and interstitial lung disease.