Twelve neonates who developed intrathoracic cystlike structures ("pseudocysts") are described. All infants had clinical and radiographic respiratory distress syndrome and all were treated with assisted ventilation. Pulmonary interstitial emphysema preceded the development of the pseudocysts in all cases. The pseudocysts appeared between 0 and 6 days of life (average, 2.4 days), and radiographically documented disappearance occurred in 10 patients at 3--18 days old (average, 7.0 days). Two patients had persisting pseudocysts at 8 and 25 days of age, and no subsequent radiographs. In no case did these structures persist symptomatically or require surgical intervention such as has been described with patients in other series. In two cases, abrupt disappearance of the pseudocysts was accompanied by increased extraalveolar gas in other locations. Eight patients developed radiographic bronchopulmonary dysplasia, which was severe in two of the cases.