Various types of acute and subacute lung injury can cause severe reactive pneumocyte atypia, which may mimic malignant proliferations and present a major diagnostic pitfall. This particularly applies to cytologic preparations and frozen sections, where background inflammatory injury may be subtle or not apparent. Although several distinguishing morphologic features of reactive pneumocytes have been suggested, there is significant overlap with neoplastic proliferations. In this article, a highly distinctive but underrecognized feature of reactive pneumocytes is highlighted that can serve as a useful diagnostic clue. The feature refers to the distinctive pinched shape of reactive pneumocytes, for which the author has coined the term "Napoleon hat" sign to draw the analogy with the iconic headwear. The analogy vividly captures the distinctive shape of reactive pneumocytes, and can serve as a useful diagnostic and teaching tool in the interpretation of pulmonary specimens.