Lung development before and after birth is dependent upon numerous physical, circulating, and locally produced factors. Before birth, the lung is highly expanded with lung liquid and the degree of expansion is a major determinant of lung growth and maturation. After birth, the entry of air produces, for the first time, surface tension in the lung, which reduces lung expansion and alters the regulation of lung development. Circulating factors such as glucocorticoids are critical for thinning lung tissue and promoting surfactant production, and retinoids are critical for alveolar development. Many locally produced factors such as growth and transcription factors are also important and may mediate the effects of both lung expansion and circulating factors on lung growth and maturation.