Bronchopulmonary dysplasia (BPD) is a chronic respiratory disease of multifactorial etiology that develops in some premature neonates who survive hyaline membrane disease (HMD). The role of corticosteroids as a cause of ongoing secondary damage in BPD remains speculative, but strategies to control this reactive inflammation form the basis for the use of corticosteroids. In several controlled clinical trials conducted to assess the role of corticosteroids in BPD, dexamethasone has been administered at a dose of 0.5 mg/kg/day, followed by a tapering regimen. Consistent benefits of corticosteroid use have been a decrease in the number of ventilator days and a facilitation of extubation. Common, often transient, side effects include hypertension, hyperglycemia, and poor weight gain. More serious side effects include myocardial hypertrophy, suppression of the hypothalamic-pituitary-adrenal (HPA) axis, perforated gastric ulcers, and gastrointestinal hemorrhage. The long-term effects on growth and development are unknown. The role of corticosteroids in the management of BPD still remains controversial. The dosage, timing, duration of therapy, and length of tapering period for dexamethasone treatment remain unresolved issues. The current literature supports the judicious use of corticosteroids to decrease the number of days on the ventilator and to facilitate extubation in selected infants with BPD. Further controlled clinical trials are necessary before the routine use of corticosteroids in the management of BPD can be recommended.