The mechanism by which pulmonary blood flow increases and pulmonary vascular resistance decreases after birth is not fully understood. The aim of this study was to simulate the decrease in lung volume caused by the onset of air-breathing at birth and determine whether it can duplicate the changes in pulmonary blood flow and vascular resistance that occur at this time. In chronically catheterized fetal sheep near term (145 days of gestation), fetal pulmonary arterial blood flow was measured, using coloured microspheres, before and after fetal lung liquid volumes were reduced from 52·2 ± 2·7 to 21·2 ± 1·6 ml kg-1. During the 30 min period following the reduction in lung liquid volume, the pulmonary-to-systemic arterial pressure difference decreased from 6·8 ± 1·2 mmHg (pulmonary > systemic) to 1·6 ± 0·5 mmHg. Reducing the volume of fetal lung liquid increased pulmonary blood flow from 59·1 ± 10·5 to 204·2 ± 40·4 ml min-1 (100 g tissue)-1 and reduced pulmonary vascular resistance from 0·53 ± 0·20 to 0·14 ± 0·04 mmHg min ml-1 (100 g tissue)-1. We conclude that a reduction in fetal lung liquid volume, which simulates the reduction in lung volume that occurs at birth, causes a 3- to 4-fold increase in pulmonary blood flow and a reduction in pulmonary vascular resistance of a similar magnitude. Thus, the reduction in lung volume associated with the lung changing from a liquid- to an air-filled organ, may partly account for the increase in pulmonary blood flow and decrease in pulmonary vascular resistance at birth.