Lung cancer is the leading cause of cancer deaths worldwide. In order to determine if lung nodules are cancerous, a biopsy needs to be taken. There is a need to be able to perform more of these biopsies through a transbronchial approach in order to reduce the risk of pneumothorax that is associated with transthoracic biopsies. This is particularly the case at the periphery of the lung where the bronchioles become too small for a traditional bronchoscope. The proposed biopsy tool incorporates a compact coaxial camera and illumination configuration to make it more compact than a traditional bronchoscope. It also includes a new flexible needle design that allows a biopsy to be taken adjacent to a radial ultrasound transducer. The navigation and tissue biopsy capabilities of the proposed device are demonstrated through benchtop and animal testing.