Where does the diffusion take place in respiratory system?

The diffusion in the respiratory system takes place in the alveoli. The alveoli are tiny, sac-like structures that line the lungs. They are covered in capillaries, which are tiny blood vessels. The oxygen that we breathe in diffuses across the alveoli and into the capillaries. The carbon dioxide that we breathe out diffuses out of the capillaries and into the alveoli.