Background: Postnatal alterations in pulmonary mechanics, energetics and functional residual capacity (FRC) describe the structural maturation of the preterm respiratory system. Objective: To evaluate longitudinal changes in pulmonary function in infants with respiratory distress syndrome (RDS) treated with oxygen, positive pressure ventilation and synthetic surfactant (Exosurf®). Methods: Serial pulmonary function tests were performed in surfactant-treated infants [mean ± SD birth weight (BW) = 1,112 ± 276 g, gestational age (GA) = 29 ± 3 weeks] at postnatal ages: <3 days, 1, 2, 3, 4 and 6–8 weeks until term postmenstrual age (PMA). Tidal volume, pulmonary compliance (CL), pulmonary resistance (RT) and flow-resistive work were analyzed following simultaneous measurements of airflow and transpulmonary pressure signals. Serial FRC measurements were made in a randomly selected group. Results: Prior to 28 weeks’ PMA, CL was unchanged irrespective of GA. At age 1 week the likelihood ratio (LR) for bronchopulmonary dysplasia (BPD) based on CL, RT and GA was predicted to be >90% for those with BW <750 g (LR >100) as compared to <10% probability (LR = 0.3) for infants >1,500 g. Significant linear increase in CL to PMA was evident >28 weeks’ PMA (r = 0.86, p < 0.01) at 0.17 ml/cm H2O/kg/week. By term PMA, mean CL was 2.60 ± 0.07 ml/cm H2O. Improvements in FRC of preterm infants with RDS who recovered occur at a more rapid rate (∼25 ml/kg) compared to those who developed BPD (∼20 ml/kg). Conclusions: Slow but incremental postnatal pulmonary improvement, minimal <28 weeks’ PMA, were comparable for all infants. Along with diminished FRC, these changes reflect persistent deleterious effects of positive pressure ventilation, alveolar hyperoxia and unrecognized pulmonary overdistension.