In the mediastinum, at the level of the fifth thoracic vertebra, the trachea divides into the right and left primary bronchi. The bronchi branch into smaller and smaller passageways until they terminate in tiny air sacs called alveoli.
The cartilage and mucous membrane of the primary bronchi are similar to that in the trachea. As the branching continues through the bronchial tree, the amount of hyaline cartilage in the walls decreases until it is absent in the smallest bronchioles. As the cartilage decreases, the amount of smooth muscle increases. The mucous membrane also undergoes a transition from ciliated pseudostratified columnar epithelium to simple cuboidal epithelium to simple squamous epithelium.
The alveolar ducts and alveoli consist primarily of simple squamous epithelium, which permits rapid diffusion of oxygen and carbon dioxide. Exchange of gases between the air in the lungs and the blood in the capillaries occurs across the walls of the alveolar ducts and alveoli.

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