Respiratory distress syndrome (RDS) in newborn neonates is characterised by deficient secretion of surfactant from type III alveolar cells. Administration of surfactant to airways acutely decreases the degree of respiratory failure and increases the survival rate in neonates with RDS. Clinically available surfactants are lipid extracts derived from animal lung lavage or from whole lung. Synthetic surfactants contain phospholipids or additional spreading agents. An optimal exogenous surfactant would be efficacious, nontoxic and nonimmunogenic, resistant to oxidants and proteolytic agents, widely available at reasonable cost and manufactured with little batch-to-batch variability. Surfactant has been instilled into the airways as a bolus infusion through the endotracheal tube. In addition, surfactant may be given by aerosolisation or continuous infusion into the airways. Suggested dosages range from 50 to 200 mg/kg. Exogenous surfactant is cleared from the epithelial lining fluid (ELF) mainly by alveolar epithelial cells, although alveolar macrophages and the central airways may also contribute to clearance of the drug. Only small quantities of surfactant actually enter the blood stream. A significant fraction of surfactant is taken up, processed, and secreted back into the alveolar space by type II alveolar cells. This process is termed recycling. Phosphatidylglycerol, given to small premature neonates as a component of exogenous human surfactant, has an apparent pulmonary half-life of 31 +/- 3 hours (n = 11). The apparent pulmonary half-life of the main surfactant component dipalmitoyl phosphatidylcholine is 45 hours (n = 3) and that of surfactant protein A is about 9 hours (n = 4). A relationship between the dose of exogenous surfactant and its concentration in the ELF has been demonstrated. Some neonates with RDS respond poorly to surfactant therapy. The reasons for this include insufficient levels of surfactant in the ELF, uneven distribution of exogenous surfactant, inability of exogenous surfactant to enter the metabolic pathways, inhibition of surface activity by plasma-derived proteins, or inactivation of surfactant as a result of proteases, phospholipases, or oxygen free radicals. In addition, surfactant therapy may be ineffective in neonates with respiratory failure caused by factors other than surfactant deficiency. The efficacy of exogenous surfactant can be improved by increasing the dosage of surfactant and by administration of surfactant very early in respiratory failure.