We examined fetal plasma cortisol and the flow rate, electrolyte composition and surfactant content of tracheal fluid in chronic experiments with 9 fetal sheep. We catheterized a fetal artery and inserted a tracheal catheter to divert fluid into an intrauterine bag which was emptied every 12 hr. Surfactant was assayed on a surface balance and cortisol was determined by the protein binding radioassay. From 120-150 days of gestation there was no chanae in mean fluid Na+ (149 meq/L), Cl− (153.9/meq/L), Ca++ (2.2 mg/100 ml) and pH (6.21). The rate of fluid production was 4.5 ml/Kg/hr. K+ increased from 4 meq/L at 120-130 days to about 9 meq/L (145-150 days) while plasma Na+, Cl−, Ca++, pH and K+ were constant at 146 meq/L, 109.1 meq/L, 12 mg/100 ml, 7.4 and 4.3 meq/L, respectively. Cortisol was less than 1.5 μg/100 ml total (0.3 μg/100 ml free) until 148 days when it increased rapidly to 10.5 total (3.2 free) at 148 days. Surfactant first was detected in tracheal fluid between 125-130 days and increased exponentially after 135 days to a value of 200 μg/ Kg/hr a+ l47 days. Thus, fluid:plasma gradients exist for Cl−, Ca++, H+ and, in late gestation, K+. It appears that an increase in fetal cortisol is not the stimulus for appearance of surfactant in the lamb, although this hormone may induce the rapid accumulation of surfactant prior to delivery.