The effect of dexamethasone of the maturation of the fetal lungs of rats with streptozotocin-induced diabetes was studied morphologically and biochemically. By light and electron microscopy there was little difference in fetal pulmonary maturation between the untreated control group and the untreated diabetic group, but when both groups were treated with dexamethasone the fetuses showed accelerated pulmonary maturation, approximately one day earlier with an increase of air spaces per unit area and an earlier appearance of type II pneumocytes. The number of osmiophilic inclusion bodies per alveolus and per type II pneumocyte, and the lecithin/sphingomyelin ratio in amniotic fluid increased markedly and they were statistically significant in both groups injected with dexamethasone, but were decreased in the untreated diabetic group, though only the L/S ratio of the animals of the 19th day gestation was statistically significant. Phosphatidylglycerol was present in the amniotic fluid of the groups injected with dexamethasone one day earlier than the untreated control and the untreated diabetic groups. However, the intensity of phosphatidylglycerol tended to be lower in the untreated diabetic group. It is concluded that the prenatal administration of dexamethasone to the diabetic pregnant rats will accelerate fetal pulmonary maturation morphologically and promote the synthesis of surfactant biochemically.