Background: We hypothesized that the use of inhaled budesonide (BUD) would alter somatic growth by increasing energy expenditure (EE) in premature infants with chronic lung disease (CLD). Methods: A prospective study was conducted of the effect of BUD on EE, growth and salivary cortisol excretion in infants with CLD who required supplemental oxygen and were treated with inhaled BUD for 4 weeks according the severity of their CLD, or without BUD treatment. Infants were compared with a healthy control group matched for gestational age. EE, anthropometric measures and salivary cortisol levels were examined before, during and after BUD treatment. Results: A total of 30 spontaneously breathing premature infants were enrolled in the study. EE in CLD (BUD) and CLD (no BUD) patients were greater than EE in healthy preterm infants (p < 0.01) at the study time points. Growth did not differ between the groups. Salivary cortisol levels of treated infants were significantly lower when compared with the levels of nontreated infants. Conclusion: The administration of inhaled BUD in preterm infants with CLD was associated with an increase in EE, a suppression of endogenous cortisol production and with no effect on duration of supplemental oxygen, but did not compromise their somatic growth.