The aim of our study was to examine the effect of labor and birth canal compression on the rate of clearance of lung fluid. We recruited 10 babies born by vaginal delivery and 10 born by elective cesarean section (ECS). Thoracic gas volume (TGV) was measured using total body plethysmography, and functional residual capacity (FRC) by argon dilution, at ages 4-6 h and 24 h. Additional measurements were obtained at age 48 h in the infants born by ECS. Our results showed significant increases in mean TGV (from 23.1 mL/kg to 27.4 mL/kg, P = 0.002) and FRC (from 21.2 mL/kg to 24.1 mL/kg, P = 0.04) between 4-6 h and 24 h of age after ECS delivery. Lung volumes did not change significantly over the next 24 h (TGV, 27.4 mL/kg, P = 0.97; FRC, 25.5 mL/kg, P = 0.42). In those infants born by vaginal delivery, the mean TGV at 4-6 h and 24 h were 26.7 and 28.7 mL/kg, respectively (P = 0.09), and the mean FRC results were 23.1 and 24.9 mL/kg, respectively, P = 0.08). The TGV tended to be lower at 4-6 h in those born by ECS than in infants born vaginally (23.1 vs. 26.7 mL/kg, P = 0.05). We conclude that there is a delay of up to 24 h in the establishment of final lung volumes in babies born without exposure to labor or passage through the birth canal, and that this may explain the increased respiratory morbidity associated with delivery by ECS.