Background: Diffuse parenchymal lung diseases (DPLD) is a heterogenous group of disorders with variable presentations and prognoses. Early assessment and identification of markers of severity is paramount. Aims: We aimed to assess lung ultrasound (LUS) as a diagnostic tool and marker of severity along with oxygen desaturation (SpO2) and correlate findings with chest HRCT and other physiologic parameters. Methods: This observational study recruited 31 DPLD patients and 20 healthy controls from a tertiary care university hospital. Participants had six-minute walk test (6MWT), spirometry, echocardiography, and polysomnography level III. Patients had HRCT done and Warrick scores were calculated. LUS for pleural examination and B-line quantification was conducted on 6 zones bilaterally. Results: Patients had a statistically significant higher total number of B-lines compared to controls; 41(28-69) vs. 0(0-1) respectively, p<0.001. Nadir nocturnal SpO2 was 81.5(76-87)% vs. 91.5(90-93)%, p<0.001. 6MWT nadir SpO2 was lower in diseased; 95(91-97)% vs. 98(98-99)%, p<0.001. Among patients, 61.3% had pulmonary hypertension and 54.8% had fibrotic-DPLD. The latter, compared to non-fibrotic-DPLD, had more B-lines, pleural fragmentation, higher Warrick scores and lower 6MWT nadir SpO2 (p<0.05) that were moderately correlated with FVC. Warrick score, T90 and pleural fragmentation in regression analysis were the most predictive of nadir 6MWT SpO2 (adj R2:68.7%, p<0.05). Conclusions: Our results support the role of LUS in the diagnosis and prognostication of DPLD. The number of B-lines and pleural fragmentation in LUS and nocturnal desaturation can play a role as markers of disease severity.