We have previously shown that fetal lambs which have undergone intrathoracic vagal denervation have increased surface tension and develop respiratory failure at birth. However, the mechanism of surfactant dysfunction remains unknown. To quantify the relative roles of surfactant synthesis, release and activity, we studied 15 chronically instrumented unanesthetized newborn lambs; eight of 15 fetuses underwent intrathoracic vagal denervation whereas seven were sham-operated. Each fetus was instrumented to record heart rate, blood pressure, diaphragmatic electromyogram, arterial pH, and blood gas tensions between 131-133 d gestation (term=147±2 d) and studied at 142-143 d after spontaneous vaginal delivery. Various cardiorespiratory variables were recorded immediately after birth and the animals were sacrificed at 1 hr of age. Surfactant associated proteins (SP-A, -B and -C) mRNAs were analyzed in the right middle lobe whereas bronchoalveolar lavage(BAL) was performed on the remaining lungs to determine total and various phospholipid (PL) species, large aggregates (LA), small aggregates (SA) and plasma proteins. Recovery of BAL was similar in both groups (91±1 vrs 90±2%). Total phospholipids were also similar in the sham-operated and vagotomized animals. However, LA (mg/kg) in sham group (23±4.24) were significantly higher than in the vagotomized group (10±1.9; p=0.01). Also, the LA as a percentage of total PL was significantly higher in the sham operated animals (52±6 vrs. 25±8, respectively, p=0.009). The percentage of phosphatidylcholine (n=9) was similar in both groups, however, phosphatidylinositol (PI) was higher (p=0.02) and phosphatidylglycerol (PG) was lower (p=0.05) in the vagotomized group. Northern blot analysis showed decreased mRNA levels of SP-A and SP-B, whereas no significant differences were observed for SP-C. We conclude that vagally denervated animals have an increased proportion of SA, an inactive form of surfactant, decreased LA, and delayed surfactant maturation as indicated by the PI and PG ratios, and decreased expression of surfactant apoproteins mRNAs. These changes in surfactant system may play a role in respiratory failure in vagally denervated newborn lambs.