The detailed morphology of pulmonary neuroendocrine (NE) cells has been defined only during the last decade. The purpose of this paper is to review the main morphologic features of the NE cells, to review the methods and techniques used for their identification, and to discuss the development and functional significance of these cells. The main emphasis is on NE cells in human lung, but where appropriate, studies in animal lungs are also included. NE cells are present in the airway epithelium of human and various animal species and occur singly as well as in clusters called neuroepithelial bodies (NEB). The general cytochemical features (common to both single NE cells and NEB) include cytoplasmic argyrophilia, fluorogenic amine content, positive staining with lead-hematoxylin, and masked metachromasia. These staining properties are similar to those found in APUD cells scattered in various tissues. More specific cell markers are immunoreactivity to peptide hormones (bombesin, calcitonin, leu-enkephalin) identified so far in NE cells of human lung, and immunoreactivity to serotonin found in both human and animal lungs. At the ultrastructural level, NE cells are characterized by the presence of cytoplasmic dense core granules (90-150 nm in diameter), which are considered the storage site of amine and peptide hormones. The distinctive feature of NEB, not found with single NE cells, is the presence of nonmyelinated nerve endings in contact with granulated cells, and positive staining for acetylcholinesterase. The single NE cells are scattered throughout the tracheobronchial epithelium, whereas NEB are found only within the intrapulmonary airways. In postnatal lungs, both the single NE cells and NEB appear concentrated in small peripheral airways. In developing human lung, the first NE cells appear at 8 weeks' gestation, when all other epithelial cells are still undifferentiated. The development and cytodifferentiation of NE cells progresses in a centrifugal direction. By the end of the glandular period, single and groups of NE cells are found along the entire length of primitive bronchial epithelium. Based on differences in the size and morphology of cytoplasmic granules, three distinct types of NE cells can be recognized. During terminal stages of development, NE cells appear in small peripheral airways and primitive saccules. The functional considerations include the possible role of NE cells as endocrine, paracrine, or receptosecretory cells involved in neurohormonal regulation of pulmonary vascular or bronchial responses, and possible function of NEB as intrapulmonary hypoxia-sensitive chemoreceptors.