Excessive liquid in airways and/or distal lung tissue may underpin the respiratory morbidity associated with transient tachypnea of the newborn (TTN). However, its effects on lung aeration and respiratory function following birth are unknown. We investigated the effect of elevated airway liquid volumes on newborn respiratory function. Near-term rabbit kittens (30 days gestation; term ~32 days) were delivered, had their lung liquid-drained, and either had no liquid replaced (control; n = 7) or 30 ml/kg of liquid re-added to the airways [liquid added (LA); n = 7]. Kittens were mechanically ventilated in a plethysmograph. Measures of chest and lung parameters, uniformity of lung aeration, and airway size were analyzed using phase contrast X-ray imaging. The maximum peak inflation pressure required to recruit a tidal volume of 8 ml/kg was significantly greater in LA compared with control kittens (35.0 +/- 0.7 vs. 26.8 +/- 0.4 cmH2O, P < 0.001). LA kittens required greater time to achieve lung aeration (106 +/- 14 vs. 60 +/- 6 inflations, P = 0.03) and had expanded chest walls, as evidenced by an increased total chest area (32 +/- 9%, P < 0.0001), lung height (17 +/- 6%, P = 0.02), and curvature of the diaphragm (19 +/- 8%, P = 0.04). LA kittens had lower functional residual capacity during stepwise changes in positive end-expiratory pressures (5, 3, 0, and 5 cmH20). Elevated lung liquid volumes had marked adverse effects on lung structure and function in the immediate neonatal period and reduced the ability of the lung to aerate efficiently. We speculate that elevated airway liquid volumes may underlie the initial morbidity in near-term babies with TTN after birth.NEW & NOTEWORTHY Transient tachypnea of the newborn reduces respiratory function in newborns and is thought to result due to elevated airway liquid volumes following birth. However, the effect of elevated airway liquid volumes on neonatal respiratory function is unknown. Using phase contrast X-ray imaging, we show that elevated airway liquid volumes have adverse effects on lung structure and function in the immediate newborn period, which may underlie the pathology of TTN in near-term babies after birth.