The feasibility of using a multiple gas rebreathing technique to evaluate cardiopulmonary function in the ventilated neonate was assessed by measuring functional residual capacity, diffusing capacity of lung for carbon monoxide, and effective pulmonary capillary blood flow in 10 neonates with respiratory distress syndrome. Measurements were first made on the level of positive end expiratory pressure (PEEP) selected by the clinicians caring for the infants ("clinical" PEEP, mean of 4.4 +/- 0.3 cm H2O). To evaluate the effect of PEEP on cardiopulmonary function, PEEP was then changed above (mean of 6.7 +/- 0.4 cm H2O) and below (mean of 1.9 +/- 0.3 cm H2O) this level and measurements were repeated. Mean functional residual capacity on clinical PEEP (10.8 +/- 1.6 ml/kg) was far below the predicted normal and varied directly with changes in PEEP (mean change of 1.2 ml/kg/cm H2O). Diffusing capacity of the lung for carbon monoxide on clinical PEEP was 0.04 +/- 0.01 ml/min/mm Hg/kg and did not change significantly with changes in PEEP. Mean effective pulmonary capillary blood flow was highest (70 ml/min/kg) at the lowest level of PEEP. However, the effect of increasing PEEP on effective pulmonary capillary blood flow in individual infants varied. Increasing PEEP increased arterial oxygen tension but did not cause changes in systemic arterial pressure or heart rate. We conclude that infants with respiratory distress syndrome have severe lung injury with decreased functional residual capacity and diffusing capacity of the lung for carbon monoxide, and that lung volume improves with the use of PEEP.(ABSTRACT TRUNCATED AT 250 WORDS)