We hypothesized that congenital diaphragmatic hernia (CDH) may decrease distal airspace fluid absorption due to immaturity of alveolar epithelial cells from a loss of the normal epithelial Na⁺ transport, as assessed by amiloride and epithelial Na⁺ channel (ENaC) and Na,K-ATPase expression, as well as failure to respond to endogenous epinephrine as assessed by propranolol. Timed-pregnant dams were gavage fed 100 mg nitrofen on 9.5 days gestation to induce CDH in the fetuses, and distal airspace fluid absorption experiments were carried out on 22-day gestation (term) fetuses. Controls were nitrofen-exposed fetuses without CDH. Absorption of distal airspace fluid was measured from the increase in ¹³¹I albumin concentration in an isosmolar, physiologic solution instilled into the developing lungs. In controls, distal airspace fluid absorption was rapid and mediated by -adrenoceptors as demonstrated by reversal to fluid secretion after propranolol. Normal lung fluid absorption was also partially inhibited by amiloride. In contrast, CDH fetuses continued to show lung fluid secretion, and this secretion was not affected by either propranolol or amiloride. CDH lungs showed a 67% reduction in ENaC and ENaC expression, but no change in ₁-Na,K-ATPase expression. These studies demonstrate: (1) CDH delays lung maturation with impaired distal airspace fluid absorption secondary to inadequate Na⁺ uptake by the distal lung epithelium which results in fluid-filled lungs at birth with reduced capacity to establish postnatal breathing, and (2) the main stimulus to lung fluid absorption in near-term control fetuses, elevated endogenous epinephrine levels, is not functional in CDH fetuses.