Eighteen infants were entered into a randomized, placebo-controlled trial of dexamethasone therapy for chronic lung disease. Initial ventilation requirements were similar in the two groups, although all infants were in headbox oxygen on entry to the trial. The dexamethasone-treated infants showed a significantly more rapid improvement during the 1st week of treatment, although the overall duration of oxygen therapy was similar in both groups. Cranial ultrasound examination revealed new periventricular abnormalities in three out of the five dexamethasone-treated infants who had previously normal scans, compared with none of four similar placebo-treated infants. A large trial, focussing on potential complications, is now needed.