Lung lavage was performed in 16 anaesthetized rabbits to produce surfactant-deficient lungs. This resulted in alveolar collapse, an arterial PO2 of less than 15 kPa on 100% oxygen and an inflection point on the inspiratory limb of the pressure-volume curve at an airway pressure of 8-10 mm Hg. One group of eight animals was then ventilated with a positive end-expiratory pressure (PEEP) equal to the pressure at the inflection point, whilst the second group of eight was ventilated with a PEEP 5 mm Hg less than the inflection point. Animals in the high PEEP group had a significantly greater arterial PO2 than those in the low PEEP group, but the mean survival time for each group was similar. However, there was a significantly greater incidence of hyaline membranes in the low PEEP group. Various mechanisms to explain these findings are discussed.