Parenteral glucocorticoids have been shown to be effective in the treatment of oxygen- and ventilator-dependent bronchopulmonary dysplasia. We conducted a randomized, prospective study using a nebulized, water-soluble form of beclomethasone dipropionate for the treatment of infants with oxygen- and ventilator-dependent lung disease. Newborn infants with chest x-ray changes consistent with bronchopulmonary dysplasia at 14 days of age were randomly assigned, in a paired sequential fashion by birth weight, to treatment (beclomethasone) or placebo (saline solution) groups. Treatment included three nebulized doses of beclomethasone (50 micrograms) or saline solution per day for 28 days. Measured variables included tidal volume, total dynamic compliance, and airway resistance. Weight gain, gender, and incidence of infection during therapy were also recorded. Pulmonary functions were measured before initiation of therapy and weekly thereafter. Thirteen infants, seven in the saline solution group and six in the beclomethasone group, met study criteria and completed treatment. Infants treated with beclomethasone had reductions in airway resistance that were significant in weeks 2, 3, and 4 (p < 0.05, p < 0.02, and p < 0.001, respectively). Dynamic lung compliance increased at weeks 3 and 4 (p < 0.01 and p < 0.05, respectively). As expected, tidal volume increased with weight and time, but there were no significant differences between groups. There were no differences between the groups in weight gain, gender, or infection. This study demonstrates that beclomethasone by nebulization (1) reduced airway resistance in oxygen-dependent neonates with bronchopulmonary dysplasia, (2) improved dynamic lung compliance, as reported with parenterally administered glucocorticoids, and (3) produced no apparent increase in the incidence of infection.