To determine whether changes in lung volume may be responsible for the clinical improvement in preterm infants given exogenous surfactant, we measured functional residual capacity (FRC), lung mechanics, and partial pressure of oxygen in seven ventilated neonates (birth weight 1080 +/- 361 gm (mean +/- SD); gestational age 28.3 +/- 2.6 weeks) less than 9 hours of age who had findings typical of hyaline membrane disease. All patients received 100 mg/kg calf lung surfactant extract. FRC was measured by a closed-circuit helium-dilution technique, and lung mechanics were determined by least mean squares analysis. FRC increased in all patients (range 56% to 330%; p less than 0.03). Dynamic lung compliance and total airway conductance did not change. Mean +/- SEM specific lung compliance (dynamic lung compliance/FRC) decreased 55.93% +/- 4.27% (p less than 0.02) and mean specific conductance (total airway conductance/FRC) decreased 45.91% +/- 9.74% (p less than 0.009). Mean alveolar/arterial partial pressure of oxygen ratio decreased 51.0% +/- 8.67% (p less than 0.01). These data indicate that the immediate improvement in oxygenation after surfactant administration is related to increased lung volumes. The decrease in specific lung compliance and specific airway conductance is suggestive of increased distention rather than recruitment of functional alveoli.