Understanding the complex multisystem dysfunction in the infant with a congenital hernia of the posterolateral diaphragm is still evolving and has changed radically during the last decade. The reduction in lung mass, in conjunction with surfactant deficiency and diminished compliance, leads to initial deficiencies in oxygenation and carbon dioxide (CO2) removal. This may then be potentiated by an extremely reactive hypoplastic pulmonary arterial system. Treatment no longer is focused on the operative repair but rather on the components of the pathophysiological process that are potentially reversible. Thus, extracorporeal membrane oxygenation and delay of repair until resolution of pulmonary artery hypertension have become mainstays of therapy and are probably responsible for increasing the survival rate in the patient who presents early with respiratory distress from 50% to 65%. Still far from acceptable, these results are giving impetus to new approaches to therapy including drugs such as nitric oxide, fetal intervention including open repair, and lung transplantation.