Bronchiolitis obliterans syndrome (BOS) remains a major complication after lung transplantation, causing significant morbidity and mortality in a majority of recipients. BOS is believed to be the clinical correlate of chronic allograft dysfunction, and is defined as an obstructive pulmonary function defect in the absence of other identifiable causes, mostly not amenable to treatment. Recently, it has become clear that BOS is not the only form of chronic allograft dysfunction and that other clinical phenotypes exist; however, we focus exclusively on BOS. Radiologic findings typically demonstrate air trapping, mosaic attenuation, and hyperinflation. Pathologic examination reveals obliterative bronchiolitis lesions and a pure obliteration of the small airways (< 2 mm), with a relatively normal surrounding parenchyma. In this review, we highlight recent advances in diagnosis, pathologic examination, and risk factors, such as microbes, viruses, and antibodies. Although the pathophysiological mechanisms remain largely unknown, we review the role of the airway epithelium and inflammation and the various experimental animal models. We also clarify the clinical and therapeutic implications of these findings. Although significant progress has been made, the exact pathophysiological mechanisms and adequate therapy for posttransplantation BOS remain unknown, highlighting the need for further research to improve long-term posttransplantation BOS-free and overall survival.