Areas of insertion of alveolar septa into connective tissue sheaths surrounding extraalveolar structures such as pulmonary arteries, veins, and conducting airways were examined in healthy rabbit lungs. Electron micrographs show that at this location, interstitial cells of the alveolar wall spread out delimiting an apparent boundary between the septal compartment where lung capillaries are located and all other extraalveolar compartments where pulmonary lymphatics are located. These cells seem to be part of the cell population of the alveolar interstitium and often send back extensions deep into the alveolar septum. In the extraalveolar sheath they often curl up to form incomplete tubes. It is suggested that these are incomplete sinusoids and represent the origin of the pulmonary lymphatic network. Occasional close association of the boundary cells with free interstitial mononuclear cells was observed. We conclude that the septal and the extraalveolar interstitium are separate connective tissue compartments and this suggests that lymph originates in the extraalveolar sheaths.