A high proportion of infants who die in the perinatal period have undersized lungs of reduced weight and DNA content relative to body weight. Failure of formation or leakage of amniotic fluid causes a spectrum of changes varying from severe failure of growth and maturation of the lung to a predominantly maturational deficiency. The changes are associated with narrow airways suggesting a failure to secrete or retain lung liquid. Conditions in which there is reduction of thoracic volume, or certain neural and muscular abnormalities, are associated with failure of lung growth without impaired maturation. Studies in animals indicate that liquid secretion into the fetal airways and breathing movements are essential for normal lung growth. Such functions are readily inhibited by operations, drugs, or non-specific forms of stress. The success or failure of adaptation to extrauterine respiration may often be determined by the balance of actors influencing respiratory function in early fetal life.