Chronic lung disease (CLD) of prematurity is a common disorder in preterm infants who were ventilated for respiratory distress syndrome (RDS) at birth. Premature birth, mechanical ventilation and supplemental oxygen are the major risk factors for the development of CLD. Although the exact pathophysiology is unclear, recent evidence suggests that pulmonary inflammation may play a pivotal role in the development of CLD. Histologically, the evolution of CLD can be divided into an early inflammatory phase followed by a subacute and chronic fibroproliferative phase. The early, inflammatory phase of CLD is clinically indistinguishable from RDS. In bronchoalveolar lavage fluid an influx of inflammatory cells and increased levels of cytokines can be found. Pathological examination of the lungs reveals persisting hyaline membranes, necrosis of airway and alveolar epithelium and an influx of inflammatory cells in the lung. In the subacute fibroproliferative or reparative phase of CLD, persistent respiratory distress and hypercapnia are seen and patients require oxygen with or without ventilatory support. Histologically, this phase is characterized by hyperplasia of type II pneumocytes, hypertrophy of bronchial and bronchiolar smooth muscle and interstitial and perialveolar fibrosis. In the chronic fibroproliferative phase (up to 1 yr), airway remodelling occurs. Respiratory distress continues and many patients remain oxygen dependent. Cyanotic spells are frequently seen and chronic hypoxia may lead to pulmonary hypertension and right heart failure. Many patients have severe feeding problems and somatic growth is poor. In surviving patients, persisting lung function abnormalities are found. Airway resistance and airway responsiveness are increased and residual volume (RV) and RV/total lung capacity ratios remain elevated, indicating air trapping. Although lung function improves during childhood, residual abnormalities are still found in young adults, raising concerns about the evolution of pulmonary function in old age.