Surfactant deficiency and bronchopulmonary dysplasia (BPD), major obstacles in preterm infants, are addressed with pre- and postnatal glucocorticoids which also evoke harmful catabolic side-effects. Keratinocyte growth factor (KGF) accelerates surfactant production in fetal type II pneumocytes (PN-II), protects epithelia from injury and is deficient in lungs developing BPD, highlighting its potential efficacy in neonates. Neonatal rats were treated with recombinant human (rh)KGF, betamethasone, or their combination for 48 hr prior to sacrifice after which body weight, surfactant, and tissue phosphatidylcholines (PC) were investigated at postnatal d3, d7, d15, and d21. Pneumocyte proliferation, surfactant protein (SP) expression and SP-B/C in lung lavage fluid (LLF) were also determined at d7 and d21 to identify broader surfactant changes occurring at the beginning and end of the initial alveolarization phase. While all treatments increased secreted surfactant PC, BM compromised animal growth whereas rhKGF did not. At d3 rhKGF was more effective in male compared to female rats. Single treatments became less effective towards d21. Neither treatment altered PC composition in LLF. BM inhibited PN-II proliferation and increased surfactant PCs at the expense of tissue PCs. rhKGF however increased surfactant PCs without decreasing other PC species. Whereas SP-B/C gene expression was induced by all treatments, the changes in secreted SP-B/C mirrored those observed for surfactant PC. Our results encourage investigation of the mechanisms by which rhKGF improves surfactant homoeostasis, and detailed examination of its efficacy in neonatal lung injury models with a view to implementing it as a non-catabolic surfactant-increasing therapeutic in neonatal intensive care.