Extended survival after lung transplantation is primarily limited by progressive airflow obstruction and fibrotic obliteration of the small airways, termed bronchiolitis obliterans syndrome (BOS) and bronchiolitis obliterans (BO), respectively. BO is thought to represent the pulmonary-specific manifestation of chronic allograft rejection and the end result of a spectrum of different immunological insults to the allograft. Historically, research has focused on the adaptive immune system and its cellular-based rejection as the driving factor in the development of BO. Recent research in animal lung transplant models and human lung transplant recipients has identified that chemokines, humoral immunity, autoimmunity, and innate immunity also contribute to lung allograft rejection and BO. This review explores the complex immunological mechanisms that promote the high rate of pulmonary allograft failure and significantly impair survival after lung transplantation. We also identify areas for further research critical to improving transplant outcomes.