Left-sided diaphragmatic hernias were created in 26 lambs at about 78 days' gestation and repaired at 106 to 124 days' gestation. Nine of these lambs were delivered at term and lived much longer than the nonrepaired lambs delivered at term. The normal development of the fetal lamb lung is compared and contrasted with the development of the lung after creation of a diaphragmatic hernia and also with the changes in morphology resulting from in-utero repair. Creation of a diaphragmatic hernia resulted in marked delay in the development of alveoli and at term the lung had small, thick-walled terminal air-spaces with few capillaries and no true alveoli when compared with the thin-walled alveoli in normal lungs. Another striking feature was an apparent increase in the frequency of type II alveolar cells in diaphragmatic hernia lungs. In-utero repair of the diaphragmatic hernia resulted in a more normal appearance with true alveoli developing by term, although capillaries appeared to be less numerous and type II cells more numerous than in normal lungs. Surprisingly, there appears to be little difference between the left and right lungs in lambs with diaphragmatic hernia.