Alveolar adenoma of lung is a rare benign neoplasm of uncertain histogenesis. Its rarity hampers characterization of its epithelial and mesenchymal elements. Clinical and histopathologic features of 17 alveolar adenomas were reviewed. Histochemistry was performed on 10 cases, ultrastructural analysis on two, and immunohistochemistry on six cases for pneumocyte markers, thyroid transcription factor (TTF-1), surfactant protein markers pro-SP-B and pro-SP-C, and the Clara cell marker, CC10. Immunohistochemistry was performed in nine cases for desmin, smooth muscle actin, muscle-specific actin, cytokeratin, proliferating cell nuclear antigen (PCNA), factor VIII, and carcinoembryonic antigen. The mean age was 53 years. Seven cases occurred in men, and nine occurred in women. The age and sex were not known for one patient. The tumors were coin lesions on chest radiographs in asymptomatic patients except for one (cough). The mean size was 2.2 cm. The tumors were well demarcated with multiple cystic spaces containing granular material. Mostly type 2 pneumocytes lined the cystic spaces with fewer type 1 cells and no Clara cells. This was confirmed by staining for TTF-1, pro-SP-B, and pro-SP-C and by ultrastructure. CC10 was negative in all cases. The stroma varied from prominent spindle cells with a myxoid matrix to thin alveolar septa. The interstitial spindle cells resembled fibroblasts by immunohistochemistry and ultrastructure. Follow-up data available in five cases showed no recurrence at 2, 2, 5, 8, and 13 years. In summary, alveolar adenoma is a benign neoplasm consisting of an intimate admixture of alveolar epithelial and septal mesenchymal tissue. Most of the epithelial cells are type 2 pneumocytes, and the interstitial stromal cells are fibroblasts or fibroblast-like cells. Recognition of its characteristic morphological appearance allows for its distinction from other benign lesions of the lung.