The introduction of surfactant replacement therapy for the management of respiratory distress syndrome (RDS) in the premature infant is one of the major advances in neonatal intensive care. After almost 50 years of intense research, the concerted efforts of basic scientists and clinicians have been rewarded. Despite the remarkable effects of surfactant therapy of RDS, the impact on the incidence of chronic lung disease has been unclear. With the recognition of the role of surfactant inactivation in the pathogenesis of other respiratory disorders of newborns (i.e., meconium aspiration syndrome and pneumonia) newer applications as well as new challenges have emerged. This article provides an overview of the physiology of the surfactant system and the current uses of this therapy in newborns.