During the final prenatal period of fetal lung development in humans, important maturational processes occur, including the production of surfactant necessary to decrease surface tension at the air-liquid interface of the alveoli. During early gestation, the glucocorticoid receptor is expressed in the fetal lung, and glucocorticoids stimulate the production of surfactant-associated proteins and increase phospholipid synthesis by enhancing the activity of phosphatidylcholine. Other glucocorticoid-induced effects may include stimulation of cell maturation and differentiation, inhibition of DNA synthesis, changes in interstitial tissue components, stimulation of antioxidant enzymes, and regulation of pulmonary fluid metabolism. Recently, it was suggested that glucocorticoids are also important in postnatal pulmonary development, and may be related to the development of neonatal lung disease in preterm infants. Surfactant deficiency that can be prevented by antenatal corticosteroid treatment causes infant respiratory distress syndrome and requires mechanical ventilation. Ventilation by itself or in combination with high levels of oxygen, fluid overload, pulmonary infections, sepsis, and air leak syndrome causes an acute pulmonary inflammatory reaction that may result in chronic lung disease or bronchopulmonary dysplasia. Glucocorticoids are effective in the treatment of chronic lung disease of prematurity and regulate the inflammatory response by the interaction with transcription factors such as nuclear factor kappaB and activated protein 1. Indeed, inflammatory cells and the levels of chemokines and cytokines in bronchoalveolar fluid decrease after dexamethasone treatment. However, treatment of fetuses and preterm infants with repeated and/or high doses of corticosteroids may have considerable long-term side effects on somatic, brain, and lung growth. The difficult balance between short-term gain and the possible long-term side effects of glucocorticoids in preterms remains a difficult issue. Copyright 2001 Wiley-Liss, Inc.