We assessed pulmonary mechanics in 35 premature infants with respiratory distress syndrome just before and one hour after the administration of 90 mg of surfactant to each infant. Transpulmonary pressure was measured between the airway opening and an esophageal balloon with use of a differential transducer, and flow rates were measured by a pneumotachometer. Values for pulmonary mechanics were then calculated by microcomputer processing. The administration of surfactant produced a large decrease (56 percent) in the mean (+/- SEM) ratio of alveolar to arterial oxygen, from 7.1 +/- 0.5 to 3.1 +/- 0.2 (P less than 0.0001)--a change that indicates improvement in gas exchange. Associated changes in pulmonary mechanics were not demonstrable when 10 of the infants were studied during continuous mechanical ventilation. However, in the 25 infants examined during spontaneous breathing with continuous positive airway pressures (identical airway pressures before and after treatment), large and consistent improvements in pulmonary mechanics were found after the administration of surfactant. Tidal volume increased by 32 percent (P less than 0.03), minute ventilation by 38 percent (P less than 0.02), dynamic compliance by 29 percent (P less than 0.004), and inspiratory flow rates by 54 percent (P less than 0.01). We conclude that significant improvement in pulmonary mechanics results from surfactant-replacement therapy for respiratory distress syndrome, but that these mechanical changes are apparent only during spontaneous respiration and can be masked if measurements are made during mechanical ventilation.