Neonatal respiratory distress syndrome (RDS) remains one of the major causes of neonatal mortality and morbidity despite advances in perinatal care. The initial management of infants with RDS has almost become 'too routine' with little thought about the pathophysiological processes that lead to the disease and how the clinician can use the existing therapeutic interventions to optimize care. The transition from fetus to infant involves many complex adaptations at birth; the most important is the function of the lungs as a gas exchange organ. Preterm surfactant-deficient infants are less well equipped to deal with this transition. Optimum gas exchange is achieved through matching of ventilation and perfusion. In RDS, ventilation may be affected by homogeneity of the airways with atelectasis and over distension, as hyaline membranes block small airways. In turn this contributes to the inflammation that becomes bronchopulmonary dysplasia. Exogenous surfactant given early, particularly with positive end-expiratory pressure and, where necessary, gentle ventilation, would seem to be the optimum way to prevent atelectasis. How this can be achieved in neonates after surfactant therapy is explored through a review of the normal physiology of the newborn lung and how this is affected by RDS. The therapeutic interventions of resuscitation, exogenous surfactant, ventilation and inhaled nitric oxide are discussed in relation to their effects and what are currently the optimum ways to use these. It is hoped that with a better understanding of the normal physiology in the newborn lung, and the effects of both disease and interventions on that physiology, the practising clinician will have a greater appreciation of management of preterm infants with, or at risk of, RDS.