Recent studies suggest that early dexamethasone therapy may lessen the pulmonary inflammation in preterm infants with respiratory distress syndrome (RDS). To investigate whether early (<12 hr) postnatal dexamethasone therapy would reduce the incidence of chronic lung disease (CLD), a randomized, double-blind, controlled trial was conducted in 40 infants (birth weights from 500 to 1,999 gm) who had severe RDS and required mechanical ventilation within 6 hr of birth. All infants received one dose of Survanta before they were randomly assigned to control (saline placebo) or dexamethasone-treated groups (0.5 mg/kg/d for 1 week, then tapered over 3 weeks). Sequential analysis was performed with the end point of assessment being the presence or absence of CLD on postnatal Day 28. Statistical significance favoring dexamethasone was reached when 12 consecutive pairs in which one infant had CLD and the other did not have CLD showed that ten pairs favored dexamethasone and two pairs favored control treatment. Among the survivors, 12/15 were extubated in the dexamethasone group and 9/16 in the control group at the end of study. Infants in the treated group had transient hyperglycemia and hypertension. There was no difference between the groups in mortality and in incidence of sepsis or intraventricular hemorrhage. We conclude that early postnatal dexamethasone therapy is potentially effective in the lessening of CLD in preterm infants. To substantiate our result, large randomized controlled trials are needed and warranted.