Experiments were performed to clarify the mechanism by which cervical cord transection retards lung growth in the fetal rabbit. In 10 sets of fetuses operated on at 24 1/2 days gestation and studied 3--4 days later, cord section at C1--C3 (high section) caused a significantly greater reduction in lung weight and lung DNA than cord section at C5--C8 (low section) as compared with control littermates. Comparison with the lungs of additional control fetuses removed at the time of operation showed that high section had reduced lung growth by 70% and low section had reduced growth by 40% relative to sham-operated controls. The hypoplastic lungs of the high-section group had poorly expanded, thick-walled terminal sacs, while those of the low section group more nearly resembled the controls. Fetal weights and weights of liver, kidneys, thymus and diaphragm did not differ significantly between the groups, but the hearts of the low-section group were unduly large. In a separate 6 sets of fetuses tracheal ligation at the time of high-cord section was found to result in large fluid-filled lungs with a normal DNA content. The results indicate that preservation of an upper motor neurone supply to the phrenic nucleus is of critical importance for fetal lung growth, and confirm the growth-promoting effects of liquid distension of the fetal lungs. We conclude that normal fetal lung growth depends on development and maintenance of a sophisticated form of function involving integration of respiratory movements and lung lipid secretion. This functional control of fetal lung growth has important implications for perinatal medicine.