The occurrence of severe fetal dystocia due to hydrops fetalis associated with pulmonary aplasia in two male and pulmonary hypoplasia in one female Australian Dexter fetuses from two herds is described. Obstetrical intervention by caesarean section was required for delivery of the fetuses, with mortalities in one dam and the 3 calves. Clinical, pathological and genetic features are tabulated to assist in distinguishing pulmonary hypoplasia-associated hydrops fetalis from the more prevalent disorder of chondrodysplasia in Dexter cattle. Anasarca and complete absence or presence of only rudimentary lung tissue in a large thoracic cavity clearly distinguishes this entity from the lesions of Dexter chondrodysplasia that include severe micromelia and abundant lung tissue in a small thoracic cavity with shortened spine and rib cage. Pedigree information suggested that Dexter hydrops may be transmitted in an autosomal recessive manner.