Corticosteroids administered to women in preterm labor are the standard of care for reducing neonatal morbidity and mortality associated with prematurity. These agents promote lung development and reduce the incidence of neonatal intraventricular hemorrhage. Several studies have investigated the method by which fetal lung fluid is cleared after birth. This exploration resulted in the elucidation of the Starling equation or the hypothesis that fluid filtration through capillary membranes is dependent on the balance between the pressure blood places on the capillary membranes and the osmotic pressure of the membranes. The clinical observation that a neonate experiences a vaginal squeeze during a vaginal birth may be important, but it can account for only a small percentage of the lung fluid absorbed. Perhaps more importantly, amiloride-sensitive sodium transport channels (ENaCs) have emerged as key factors in the movement of alveolar fluid from the lung into the vascular system. Several potential clinical applications have been developed from this new knowledge about the physiology of lung fluid clearance at birth. Neonates born late preterm or at term by elective cesarean before the onset of labor are more likely to develop respiratory distress than those born vaginally. Based on the mechanism of action of antenatal corticosteroids, these drugs may be beneficial in the clearance of fetal lung fluid in this population. This article reviews how fetal lung fluid is cleared; the pharmacologic effects of corticosteroids on the fetus; and the risks, benefits, and controversies associated with corticosteroid use.