Lung transplantation provides a successful therapy for end-stage lung disease. However, problems such as acute and chronic lung allograft rejection, the latter also known as bronchiolitis obliterans syndrome (BOS), remain obstacles to achieving better long term outcomes. Novel biomarkers identified in peripheral blood, bronchoalveolar lavage, and lung allograft airway and parenchymal tissue are forwarding progress in the diagnosis of allograft rejection, as well as enhancing our understanding of the immunopathogenesis of BOS. Soluble CD30 levels in peripheral blood reflect T cell activation, and BAL studies with reduced airway-epithelial associated proteins such as CCSP, and increased neutrophil chemotactic factors such as HNPs 1-3 are both linked to BOS. Analysis of transbronchial biopsy specimens for C4d complement deposition, while still in its infancy, seems to help diagnose humoral rejection, which often presents as fulminant respiratory failure and capillaritis. Studies employing basic and translational approaches also now identify a role for innate immunity, as reflected by TLR recipient polymorphisms serving a protective role in the lung allograft. Bacterial and viral infections prevalent in lung allograft recipients through reactivation of endogenous organisms or acquisition of new infections, exert complex immunomodulatory effects, including persistent effector T cell types, which may influence the acquisition or stability of operational tolerance. Disruption of the delicate balance between proteases and inhibitors within the allograft airway submucosa impact upon tissue repair and fibroproliferation evident in BOS. Also of great importance, autoimmunity, as manifest by the ability to recognize self collagen V epitopes, may play a role in acute rejection. Lastly, the application of genomewide profiling, has expanded our ability to understand the biological processes involved in T cell activation, cytokine secretion, and airway injury. ‘On the therapeutic horizon, clinical studies have demonstrated improved treatment of chronic allograft rejection with agents such as inhaled cyclosporine, everolimus, and azithromycin. The widespread use of these and newer compounds awaits additional proof of efficacy from randomized, controlled studies, which, heretofore, have not attracted the attention of prominent funding groups. Ultimately, application of basic, translational, and clinical studies towards the diminution of rejection and/or the achievement of lung allograft tolerance will propel improvements (or gains) in long term patient survival post lung transplantation.