Since the 1960s there has been a continual improvement in the survival of premature infants of birthweight less than 1500 g. This has resulted in an increase in the prevalence of bronchopulmonary dysplasia (BPD), or its milder form, chronic lung disease (CLD) of prematurity. In children with BPD; the initial air trapping improves in the first 3-4 years of life, but small airway obstruction is often slow to improve, suggesting dysanaptic lung growth. Despite this, the majority of older children and adolescents with BPD/CLD do not have significant respiratory symptoms. Children born prematurely with or without hyaline membrane disease may also have a reduction in expiratory flows during childhood, albeit less severe. The clinical significance of this in the longer term is unclear. Although significant associations between decrements in expiratory flows, neonatal oxygen therapy and assisted ventilation have been demonstrated. Airway function has also been reported to be largely unrelated with perinatal events but strongly associated with birthweight. The latter suggests that intra-uterine factors such as under-nutrition may be more important than hitherto recognized. Because of a lack of longitudinal studies, it is unclear how lung function will track during adolescence and adult life. Bronchial hyper-responsiveness is significantly increased in children with BPD and to a lesser extent in those born prematurely with or without hyaline membrane disease. It is unclear whether this is due to a genetic predisposition, neonatal lung injury or anatomically smaller airways. Given the morbidity and fiscal cost of a premature birth, effective strategies to reduce the premature birth rate are needed.