Endotoxin induces alterations in the neonatal red cell membrane that result in decreased deformability and an increase in whole blood viscosity. These rheologic alterations are detrimental to flow in the microcirculation. Pentoxifylline (PTX), a methyl xanthine derivation, increases red cell deformability presumably through its effect on intracellular adenosine 5-triphosphate. The purpose of this study was to evaluate the effect of PTX on endotoxin-induced alterations in the neonatal red blood cell. Anticoagulated whole blood specimens obtained from the cord of 12 neonates at birth were used to study the effects of Escherichia coli endotoxin (LPS) with and without PTX (50 micrograms/mL) on red cell deformability and whole blood viscosity. LPS resulted in a significant (P less than .001) decrease in deformability compared with controls. PTX reversed these endotoxin-induced alterations (P less than .01), normalizing deformability to control values (P = NS). LPS resulted in a significant increase (P less than .005) in blood viscosity that was reversed by PTX (P = NS). Pentoxifylline reverses the detrimental rheologic effect of endotoxin in the neonate. This activity may be helpful in sustaining normal microcirculation in neonatal sepsis.