The normal microscopic and submicroscopic structure of the lower respiratory tract of the budgerigar (Melopsittacus undulatus) is described and compared with other birds and mammals. Granular (type II) pneumocytes are confined to linings of air sacs, parabronchi, and their atria; however, their secretions (surfactant) cover the surfaces of the infundibula and respiratory space. Infundibula extend from the atria and give rise to the air capillaries, which branch and anastomose freely with those of adjacent infundibula and other parabronchi (interparabronchial septa are not found). Infundibula and the respiratory labyrinth are lined by a continuous epithelium of squamous pneumocytes, whose perikarya are concentrated in the infundibula and whose peripheral cytoplasm is markedly attenuated. The squamous pneumocytes of the respiratory labyrinth share a basal lamina with the blood capillaries that they envelop.