Alveolarization is impaired in rats treated with dexamethasone (Dex) on postnatal days 4-13, but concomitant treatment with all-trans retinoic acid (RA) increases alveolar number. To determine whether morphological changes induced by Dex and/or RA predict changes in lung function at 1 mo, we assessed resting breathing parameters, dynamic compliance, ventilation required to maintain O(2) saturation at > or = 90%, and pressure-volume curves of air-filled lungs. During resting breathing, mean tidal volume per gram was greater in Dex + RA-treated rats than in controls (P < 0.05). Dynamic compliance was also greater in Dex- and Dex + RA-treated rats than in controls or RA-treated rats (P < 0.02). In Dex- and Dex + RA-treated rats, we observed increased hysteresis ratios (P < or = 0.006), air trapping (P < 0.05), and lung volumes at 5 and 13.5 cmH(2)O pressure (P < 0.001) and decreased elastic recoil (P < 0.007). The effect of Dex on elastic recoil was greater in female than in male rats (P = 0.006). Despite impaired septation, O(2) saturation was not compromised in Dex- or Dex + RA-treated rats. Thus lung function changes induced by Dex treatment during alveolarization were not prevented by concomitant treatment with RA.