Dexamethasone, a glucocorticosteroid hormone, inhibits the formation of alveoli; retinoids and glucocorticosteroid hormones can be mutually antagonistic. These observations led us to test the hypothesis that the administration of retinoic acid to postnatal rats would prevent the low alveolar number and the low body mass-specific gas-exchange surface area (Sa) produced by treatment with dexamethasone. We used serial lung sections to distinguish alveoli from alveolar ducts and stereological procedures that allow quantitation of alveoli uninfluenced by their size, shape, or distribution. Treatment with retinoic acid prevented the low number of alveoli and the low body mass-specific Sa caused by treatment with dexamethasone. In otherwise untreated rats, retinoic acid caused a 50% increase in the number of alveoli, but without an increase in Sa, suggesting the action of a regulatory mechanism to prevent unneeded Sa. These findings provide the first experimental support for the possibility that, in individuals with too few alveoli for adequate gas exchange, treatment with a pharmacological agent may provide preventative or remedial therapy.