Five-day-old rats subjected to prolonged asphyxia at body temperature (37 °) developed brain oedema as measured by increase in brain water and an increase in brain Na+/K+ ratio. Pretreatment with dexamethasone (20 μg/g body wt.) prevented brain oedema and electrolyte alterations during asphyxia. Dexamethasone (20 μg/g body wt.) treatment following asphyxia facilitated the return of altered brain water and Na+/K+ ratio to normal levels. However, this dose level retards brain and bodily growth. Lower doses of dexamethasone, more comparable with those used clinically, were not effective in preventing or reducing brain oedema. A possible mechanism of action of decamethasone is suggested.