In 8 dogs, bilateral pulmonary emphysema was induced by intratracheal instillations of papain, and in 6 dogs, unilateral emphysema was induced by bronchoscopic instillation of papain in the right main bronchus. Development of emphysema was documented by weekly pulmonary function studies. Lung compliance and functional residual capacity were increased, and airway resistance was increased in forced ventilation. When emphysema was established, unilateral allotransplantation of the lung was performed. Postoperative studies of lung function showed no serious ventilation-perfusion imbalance. Ventilatory function and oxygen consumption of the graft were at least equal to the animal's own damaged lung. Respiratory insufficiency and death were always accompanied by rejection or severe infection. It is concluded that postoperative respiratory failure was not due to difference of airway and vascular resistance between the damaged lung and the graft.