Adequate pulmonary function at birth depends upon a mature surfactant system and lungs of normal size. Surfactant is controlled primarily by hormonal factors, especially from the hypophysis, adrenal, and thyroid; but these have little influence on fetal lung growth. In contrast, current data indicate that lung growth is determined by the following physical factors that permit the lungs to express their inherent growth potential. (a) Adequate intrathoracic space: lesions that decrease intrathoracic space impede lung growth, apparently by physical compression. (b) Adequate amount of amniotic fluid: oligohydramnios retards lung growth, possibly by lung compression or by affecting fetal breathing movements or the volume of fluid within the potential airways and airspaces. (c) Fetal breathing movements of normal incidence and amplitude: fetal breathing movements stimulate lung growth, possibly by stretching the pulmonary tissue, and do not affect mean pulmonary blood flow but do induce small changes in phasic flow; these changes are probably too slight to influence lung growth. (d) Normal balance of volumes and pressures within the potential airways and airspaces: in the fetus, tracheal pressure greater than amniotic pressure greater than pleural pressure. This differential produces a distending pressure which may promote lung growth. Disturbing the normal pressure relationships alters the volume of fluid in the lungs and distorts lung growth, which is stimulated by distending the lungs and is impeded by decreasing lung fluid volume. The mechanisms by which these factors affect lung growth remain to be defined. Fetal lung growth also depends on at least a small amount of blood flow through the pulmonary arteries.(ABSTRACT TRUNCATED AT 250 WORDS)