In 1988 a heat moisture exchanger (HME) was introduced for neonatal use. We tested this in the laboratory for efficiency of heat and moisture retention at typical neonatal ventilator settings. Methods: A manifold was built which contained the HME with either side, a thermistor, pressure transducer and relative humidity (RH) sensor. All six probes were connected to a computerised monitoring system that continuously displayed the variables. Results: The HME increased the dead space of the circuit by 1.2 mls. 1 hour experiments showed a temperature gradient of 4°C and a RH gradient of 90% with no significant alteration at flow rates between 2-10 L/min. There was no pressure gradient and the airway pressure rise time did not increase when the HME was present. 16 hour experiments showed no significant water loss from the water saturated artificial lung used in the tests. Conclusion: The HME is highly efficient in this system and would be useful at least in situations where infants are ventilated with unhumidified gas (eg. transportation).