Damaged alveoli in lung disease, illustration. Damaged alveoli with a cutaway section (lower left) to show the internal appearance and reduced gas-exchange capacity. Alveoli are the endpoints of the lung's airways, and are the site of gas-exchange with blood in the capillaries (shown in red and blue). Damage to alveoli can reduce lung capacity and cause permanent scarring. If the damage is irreversible or cannot be stopped, this damage can ultimately be fatal. Conditions that damage the alveoli include idiopathic pulmonary fibrosis.