An unusual case of chronic interstitial fibrosis that developed as a sequela of Mycoplasma pneumoniae pneumonia is described. Predominant manifestations included progressive exertional dyspnea, shortness of breath, persisting lung infiltrates, low lung volumes, and low pulmonary diffusing capacity. Open lung biopsy one year after the acute stage of mycoplasma pneumonia revealed focal interstitial fibrosis with early pleural thickening, hypertrophic alveolar lining cells, and peribronchiolar lymphoid cell infiltrates. Improvement in clinical manifestations, radiologic findings, and pulmonary function results occurred with steroid therapy.