Arginine vasopressin (AVP) levels on days 1, 3 and 5 and fluid balance in the perinatal period were assessed in 60 infants, median gestational age 27 weeks (range 24–33). Fluid input and output, urine osmolality and episodes of hyponatraemia were recorded on a daily basis. Forty-one infants subsequently developed chronic lung disease (CLD), they were more immature, of lower birthweight and had higher AVP levels on days 3 and 5 (p < 0.05) than the rest of the cohort. Despite similar levels of fluid input, compared to the non-CLD infants, those who developed CLD had higher urine osmolalities on days 1, 5, 6 and 7 (p < 0.05), but there were not significant differences between the two groups regarding urine output or episodes of hyponatraemia. Logistic regression analysis revealed AVP levels on day 3 were significantly correlated with the duration of oxygen dependency independent of other factors. We conclude elevated AVP levels in the perinatal period are associated with CLD development, but our results suggest they have little functional significance.