Bronchopulmonary dysplasia (BPD) is the most common respiratory complication in preterm infants who survive prolonged mechanical ventilation. Exogenous surfactant administration clearly reduces the severity of respiratory distress syndrome (RDS) and consequently the need for aggressive ventilation and prolonged oxygen therapy. However, the overall incidence of BPD has not decreased but in fact may even have increased after the introduction of surfactant therapy. There are several reasons for the lack of effect on the incidence of BPD. First, surfactant therapy and antenatal steroids have markedly increased survival of the smallest infants, i.e. those at higher risk of BPD. Second, there has been a change in the pathogenesis and the presentation of BPD. While the classic BPD was mainly the consequence of barotrauma and oxygen toxicity, the new BPD seen in the surfactant era results from the interaction of many factors that lead to prolonged mechanical ventilation and colonization of the airway with pathogens that may trigger an inflammatory cascade. While the overall incidence of BPD has not been substantially modified by surfactant therapy, the more severe cases of BPD have become less common. The data regarding the effect of surfactant administration on the incidence and severity of BPD is conflicting. There is substantial evidence that the administration of exogenous surfactant, either as prophylaxis or as a treatment in infants with established RDS, can reduce neonatal mortality and the occurrence of BPD or death. The data also suggest that prophylactic or early administration is more effective than late treatment in reducing mortality and BPD or death. No clear difference has been documented between natural or synthetic surfactant treatment in terms of their effect on incidence of BPD or mortality. The lack of consistency in the results with surfactant replacement may reflect the changing pathogenesis of BPD and the multiplicity of factors involved among which surfactant deficiency is only one.