Functional residual capacity (FRC) was measured with an open circuit N2 washout method in 20 vaginally born infants and 15 delivered by cesarean section, 30 and 120 min after birth. Umbilical artery blood was collected and analyzed for pH and catecholamine concentration. FRC was significantly higher in the cesarean section infants than in the vaginally delivered infants at 120 min of age (23.8 versus 16.8 ml/kg). The cesarean section infants also tended to have lower tidal volumes and higher respiratory frequencies than infants delivered vaginally. No significant correlation was found between catecholamine levels in umbilical artery and FRC in either group although there was a significant correlation between catecholamine level at birth and the increase of FRC from 30 to 120 min in the cesarean section group. It is suggested that the higher FRC, higher respiratory frequency and lower tidal volume in the cesarean section infants is an adaptation to a higher pulmonary water content to ensure an efficient gas exchange with the least respiratory work.