Exogenous surfactant replacement therapy, regardless of type, reduces mortality and morbidity. We have reviewed the existing data to determine the effect this form of treatment has on lung function. Several studies have demonstrated that surfactant replacement therapy improves compliance, but the timing and magnitude of the effect is variable. The effect is dependent firstly on the type of surfactant used, natural surfactant being associated with a more rapid effect than artificial surfactant; secondly whether the surfactant is given as rescue or therapy as prophylaxis and thirdly the gestational age of the infant treated. Preliminary evidence also suggests that surfactant replacement therapy may influence lung function in the long term, since infants treated with surfactant rather than a placebo have lower airways resistance and higher specific conductance at follow-up. These preliminary reports are encouraging because they suggest that exogenous surfactant replacement therapy may have the additional benefit of reducing chronic respiratory morbidity associated with premature birth.