Lung slices from fetal rats of streptozotocin-diabetic mothers incorporated [3H]glycerol and [3H]choline into phosphatidylglycerol and disaturated phosphatidylcholine, respectively. When compared to age-matched fetuses from nondiabetic mothers, lung phosphatidylglycerol synthesis of 21-day fetuses of diabetic mothers was significantly diminished, although [3H]glycerol incorporation into other phospholipids was not impaired. Synthesis of disaturated phosphatidylcholine was not diminished in lungs of 20-, 21-, or 22-day fetuses of diabetic mothers. Prenatal dexamethasone partially reversed the diminished phosphatidylglycerol synthesis at 21 days of gestation; the degree of stimulation was the same as that seen in 21-day fetuses of normal mothers but the maximal rate of [3H]glycerol incorporation was about 60% of that in 21-day fetuses of normal mothers. Fetal lung disaturated phosphatidylcholine synthesis was not stimulated by dexamethasone in diabetic pregnancies, in contrast to that seen in nondiabetic pregnancies. These data suggest that maternal diabetes interferes with the ability of fetal lungs to synthesize phosphatidylglycerol, a finding consistent with the delayed appearance of phosphatidylglycerol in the amniotic fluid of human diabetic pregnancies. In addition, maternal diabetes impairs the responsiveness of disaturated phosphatidylcholine synthesis to dexamethasone. Since phosphatidylglycerol synthesis is enhanced by prenatal dexamethasone, this therapy may still be effective for reducing the adverse impact of maternal diabetes on fetal lung development.