Regenerating areas of human lungs in pulmonary fibrosis were observed electron microscopically, and peroxidatic activity of catalase in lung peroxisomes were demonstrated cytochemically. Proliferation of Type II cells was prominent there, and some of the cells extended their cytoplasms to cover the denuded basement membrane. Unusual intermediate cells between Type II and Type I cells were observed. The extension of cytoplasmic processes with new generation of pinocytotic vesicles strongly suggested a Type I cell profile. However, catalase-positive peroxisomes were found in these cells simultaneously. From these results it was concluded that Type I cells may originate from Type II cells in human lungs as they do in experimental animals.