Although exogenous corticosteroids advance structural maturation of the fetal lung, they can adversely affect fetal lung and body growth. Our aim was to determine whether cortisol, at physiological doses, can enhance structural maturation of the hypoplastic fetal lung without affecting fetal lung growth. Fetal sheep were divided into 4 groups (n = 5 for each) and lung hypoplasia (LH) was induced in two groups. Increasing doses of cortisol (1.5-4.0 mg) were infused into one group of fetuses with LH and one group without LH; the other two groups received saline. LH retarded structural development, reduced tropoelastin mRNA levels, reduced hydroxyproline and elastin contents and increased active MMP-2 levels in the fetal lung. Cortisol infusions had no effect on fetal lung growth or body weights. In fetuses with LH, cortisol increased the percent airspace, reduced the inter-alveolar wall thickness, increased alveolar number and reduced the increase in active MMP-2 levels. Thus, relatively low doses of cortisol can enhance structural maturation of the fetal lung without adversely affecting fetal lung growth. However, cortisol did not correct the abnormal deposition of elastin within the alveolar parenchyma associated with LH, indicating that secondary septal crest formation remained abnormal.