Progressive tissue iron deposition from multiple blood transfusions is common in beta-thalassaemia and pulmonary iron deposition may result in parenchymal damage. The objectives of this study were to: 1) determine the predominant pulmonary dysfunction in patients with thalassaemia major; and 2) demonstrate that parenchymal disease, if present, is at the level of the alveolocapillary membrane.Fourteen thalassaemia major patients (13 nonsmokers) receiving regular blood transfusion and without any history of chronic respiratory disease were recruited. Pulmonary function tests and echocardiography were performed before the scheduled transfusions. Three patients with the most restricted lung function were selected for high resolution computerized tomography (CT) of the lungs.One patient had an obstructive pattern with a forced expiratory volume in one second as percentage of forced vital capacity (FEV1/FVC) of 71%. Four patients demonstrated a restrictive pattern, as defined by total lung capacity (TLC) less than 80% predicted with normal FEV1/FVC%. Twelve patients had pulmonary transfer factors for carbon monoxide (TL,CO) below 80% pred, even after correction for the anaemia, indicating parenchymal disease. Eight of these 12 patients had alveolocapillary membrane defect, as demonstrated by a gas transfer factor of the pulmonary membrane (Tm) less than 80% pred. Mean resting arterial oxygen saturation was 95±2 (range 92-98) %. Eleven patients had oxygen desaturation of 5% or more during exercise on a bicycle ergometer, consistent with interstitial lung disease. There was no clinical or echocardiographic evidence of heart failure. Percentage predicted TLC was inversely correlated with age (r=-0.547; p=0.043). Both percentage predicted TLC and TL,CO were not correlated with iron burden or desferoxamine ratio. High resolution CT in the three selected patients showed no evidence of pulmonary fibrosis. We conclude that thalassaemia major patients have a predominant restrictive lung dysfunction with pulmonary parenchymal disease and alveolocapillary membrane block. The restrictive and interstitial lung disease could not be accounted for by iron loading or pulmonary fibrosis in our patients.