Postnatal formation of alveoli can be largely prevented by glucocorticoid treatment, which accelerates alveolar wall thinning and inhibits outgrowth of new interalveolar septa. Since a double capillary network is a prerequisite for interalveolar wall formation, we hypothesized that glucocorticoid treatment inhibited alveolar formation, indirectly, by inducing precocious microvascular maturation. Between 4 and 60 days we followed up qualitatively and quantitatively the effects of 2 weeks (days 2-15) of daily Decadron (Dexamethasone phosphate) injections on the lung structure. Glucocorticoid induced only small changes in body weight or lung volume. However, during the first 2 weeks, it accelerated alveolar wall thinning and microvascular maturation and partly suppressed the outgrowth of new interalveolar septa. In Decadron-treated rats, the interstitial tissue mass was significantly reduced during the first 2 weeks, and a larger alveolar surface area was endowed with a capillary monolayer on days 10 and 13. One week after drug withdrawal, the trend towards precocious maturation of the lung was reversed. Lipofibroblasts reappeared, and inter-airspace septa regressed towards a more immature state. We found indications of a second burst of alveolization by resumption of secondary septa formation. The late sequelae of Decadron treatment (day 60) were manifested as an 'emphysematous' condition of the lungs, with larger and fewer airspaces, the delayed alveolization being insufficient to compensate for the initial deficit.