The gas exchange region of newborn rats is composed of large thick-walled gas exchange saccules that become subdivided by septum formation between ages 4 and 14 days. Dexamethasone given daily from age 4 to 13 days irreversibly prevents septation. We now asked if dexamethasone (0.1 micrograms) given daily from age 4 to 13 days accelerates alveolar wall thinning and alters wall composition. Compared with controls, within 2 days dexamethasone-treated pups had a 20% thinner gas exchange wall, a 35% lower volume density (Vv) and absolute volume of interstitial fibroblasts, and a 45% greater Vv of type II cells. At age 14 days the volumes of type I cells, fibroblasts, and acellular matrix were approximately 35% less in dexamethasone-treated pups, but the volumes of type II and endothelial cells did not exhibit significant intergroup differences. We conclude dexamethasone accelerates alveolar wall thinning and suggest dexamethasone diminishes replication of fibroblasts more rapidly than it diminishes division of type II, impairs conversion of type II to I, and does not decrease replication of endothelial cells.