Multiple peripheral carcinoid tumors were found on lung biopsy in a 53 year old woman with an eight year history of pulmonary nodules. The biopsy specimen showed nodules varying from 1 to 7 mm in greatest diameter. The larger lesions were typical bronchial carcinoids whereas the smaller ones resembled pulmonary "tumorlets." Electron microscopy showed neurosecretory granules typical of carcinoids. The common multicentric origin of carcinoids and tumorlets from Kulchitsky cells is discussed. Pulmonary function testing revealed mild obstructive and restrictive defects, both attributed to the carcinoid tumors. The history, pathology and physiology of this unusual case are presented in detail, with a review of the literature. Obstructive airways disease, presumably due to the extensive bronchiolar involvement, has not previously been reported in this entity.