We studied the effects of methylprednisolone on pulmonary function of unanesthetized dogs with oleic acid induced pulmonary edema observed over a four day period. Methylprednisolone (30 mg/kg) was administered to 11 dogs three and 24 hours after pulmonary injury. Eleven animals were untreated after pulmonary injury and served as controls. There was no difference between the two groups until 72 hours after injury, when the venous admixture of the steroid treated animals was 11 ± 3% (SD) compared to 22 ± 8% (p < 0.001) in the untreated with respective Pao2 values of 76 ± 6 torr and 64 ± 8 torr (p < 0.001). Light microscopic examination of the lungs 96 hours after injury revealed a marked proliferation of Type II pneumocytes in the methylprednisolone treated animals. We concude that, in the oleic acid or fat embolism model of pulmonary injury, methylprednisolone significantly increases resolution of the pulmonary injury presumably by stimulation of active proliferation and maturation of Type II pneumocytes.