The effect of dexamethasone therapy on fluid balance, lung function and requirement for respiratory support has been assessed. Ten premature infants were studied, they had a median gestational age of 28 weeks. None of the infants had any improvement in the respiratory status for 48 h prior to commencing dexamethasone. Fluid balance, pulmonary function and requirement for respiratory support were measured 12 h prior to and for 36 h after receiving dexamethasone. There were no significant changes in fluid input over the study period, but urine output increased significantly after 12 h of dexamethasone therapy (P < 0.02). Compliance of the respiratory system only significantly improved after 36 h of dexamethasone therapy (P < 0.03), this was associated with a significant change in the inspired oxygen concentration (P < 0.05). We conclude that the improvement in respiratory status resulting from dexamethasone therapy is preceded by a diuresis.