Congenital diaphragmatic hernia (CDH) is still an unsolved problem. A disease which was, for a long time, thought to be merely a hole in the diaphragm appears today to be an intriguing malformation with a poorly understood pathogenesis and a complex pathophysiology. CDH results in various degrees of pulmonary hypoplasia and severe persistent pulmonary hypertension of the newborn. Despite antenatal ultrasound diagnosis and continuous improvement in neonatal intensive care, these features could not be overcome, and the overall mortality rate in CDH is still reaching 50%. Experimental works during the past 20 years suggest that CDH is a disease of impaired lung development associated with, but not caused by, a structural defect of the diaphragm. Furthermore, there is increasing evidence that the lung in CDH is not only small but that there are numerous disorders (e.g. surfactant deficiency, decreased anti-oxidant activity, increased vascular reactivity with decreased nitric oxide and increased endothelin 1 activity, and left heart hypoplasia) which may be associated with impaired lung development. Although antenatal diagnosis of CDH is feasible by ultrasound, there is no reliable predictor of pulmonary hypoplasia, the main prognostic factor in CDH. Whilst modern therapeutic strategies such as high-frequency oscillatory ventilation, exogenous surfactant or inhaled nitric oxide may be beneficial in selected subjects, most newborns with hypoplastic lungs will not survive despite these postnatal therapies. Perhaps these newborns would benefit from antenatal treatment directed at altering lung growth early in utero to minimize pulmonary hypoplasia. Therefore, research is needed to elucidate the aetiology and pathogenesis of CDH. Knowledge about the cellular control of proliferation, differentiation and programmed cell death (apoptosis) in the organogenesis should clarify our understanding of these processes and allow us to develop drugs that stimulate lung growth or even correct the anatomical defect. Furthermore, early and reliable assessment of prognosis for fetuses with CDH at risk of death will become increasingly important in the identification of fetuses most likely to benefit from antenatal therapies and may eventually lead to decreased mortality.