Improvements in neonatal intensive care have resulted in more extremely low birthweight babies surviving who are at risk of developing chronic lung disease. The preterm lung is vulnerable as it is both structurally immature and deficient in surfactant and antioxidant defences. Mechanical ventilation and high inspired oxygen concentrations are often necessary for preterm babies to survive but they can cause pulmonary inflammation which leads to lung damage. Abnormal healing in the presence of ongoing inflammation leads to airways remodelling which can result in protracted respiratory problems in these babies. A commonly used definition for chronic lung disease is the requirement for supplemental oxygen beyond 36 weeks' postconception. Many drugs that are commonly used for chronic lung disease have not been subjected to proper randomised controlled trials but are widely used on the basis of small studies showing short term benefits. They can be broadly divided into 2 groups. First, there are preventative drugs that are administered early to reduce oxygen toxicity and pulmonary inflammation. Secondly, there are those administered in established chronic lung disease, designed to reduce respiratory morbidity. Pulmonary inflammation in the neonate is reduced by systemic corticosteroids. Corticosteroid therapy within the first 2 weeks of life enables earlier extubation of preterm babies with subsequent reduced chronic lung disease and improved neonatal survival when given between 7 and 14 days. However, there is an increased risk of gastrointestinal haemorrhage, metabolic derangement, ventricular hypertrophy and potential effects on long term growth and brain development. Diuretics and inhaled bronchodilators improve pulmonary compliance and reduce oxygen requirements in established chronic lung disease but probably have little effect in reducing the incidence. In babies with established chronic lung disease, home oxygen therapy enables earlier discharge and prophylaxis against respiratory syncytial virus can reduce morbidity from bronchiolitis. All of the above therapies have adverse effects that need to be considered before initiating treatment. Recently, new drugs have become available which may be beneficial. These include inhaled nitric oxide for reduction of ventilation-perfusion mismatching, recombinant human superoxide dismutase for protection against oxidative stress and alpha-1 proteinase inhibitor which may reduce airways remodelling. At present these therapies are undergoing clinical trials. Exogenous surfactant is beneficial in respiratory distress syndrome and may reduce the risk of chronic lung disease but there have been no randomised controlled trials of its use in established chronic lung disease. Drugs which have been tried unsuccessfully include erythromycin, ambroxol and mast cell stabilisers.