The clinical records of 79 stillborn and live-born infants were correlated with the postmortem findings in their lungs. Evidence of aspiration was found chiefly in the lungs of full term stillborn infants in the form of large numbers of blue-staining cornified epithelial cells together with large amounts of fat in the terminal air spaces. Hyaline-like membranes were found in the terminal air spaces in greatest numbers in the lungs of live-born premature infants in whom there was no history of any maternal complication of pregnancy or labor. It is suggested that the hyaline-like membranes may not be composed of aspirated vernix and amniotic sac contents but probably represent a reaction to an injury to the epithelium of the air spaces, especially the bronchioles and alveolar ducts. The nature of the etiologic agent remains doubtful, but the similarity of these membranes to those found in older individuals dying of pandemic influenza and with rheumatic pneumonitis suggests that intrauterine inflammatory reaction may be a factor. The relationship to congenital alveolar dysplasia has been discussed. It is suggested that the hyaline-like material is phagocytized by polymorphonuclear leukocytes and mononuclear cells. The presence of these phagocytes in the alveoli and bronchi in association with hyaline-like material is one of the chief forms of pneumonia in the newborn infant.