The effects of maternal diabetes upon fetal lung surfactant phospholipid metabolism were studied using 19-day gestational age fetal rats from mothers with streptozotocin-induced diabetes mellitus. In this experimental animal model, maternal glucose intolerance significantly impaired fetal body and lung development. However, incorporation of [14C]palmitate and [3H]choline into lung total and disaturated phosphatidylcholine was unimpaired in offspring of diabetic mothers. Dexamethasone, which is known to promote fetal lung maturation in normal pregnancies, was administered to diabetic and control mothers during late gestation. Prenatal dexamethasone inhibited lung growth in both diabetic and control pregnancies. While this agent slightly stimulated [14C]palmitate incorporation into total phosphatidylcholine and markedly enhanced [3H]choline incorporation into both disaturated and total phosphatidylcholine in control pregnancies, it failed to stimulate incorporation of either precursor into fetal lung from diabetic pregnancies.