With advances in neonatal intensive care survival of extremely low birth weight (< 1 kg) infants has increased significantly over the past decade. Dexamethasone is used increasingly for the prevention and treatment of chronic lung disease in these infants. The impact of dexamethasone therapy on the incidence or severity of retinopathy of prematurity (ROP) remains controversial. We conducted a retrospective study to evaluate the association between short-term dexamethasone treatment and severe ROP in extremely low birth weight infants. From October 1989 to December 1992, 309 very low birth weight infants were admitted to the neonatal intensive care unit. A total of 266 infants (86%) survived until hospital discharge. Of these, 90 weighed less than 1 kg. Thirty-eight of 90 infants received short-term dexamethasone therapy for chronic lung disease and the remaining 52 infants did not. Infants treated with dexamethasone and those not treated with dexamethasone were comparable in birth weight (820 vs 828 gm), gestational age (26.5 vs 26.9 weeks), inborn (11 vs 14), and occurrence of sepsis (13/38 vs 21/52). Infants treated with dexamethasone required longer periods of mechanical ventilation (44 +/- 23 vs 26 +/- 15 days, p < 0.001), had longer duration of supplemental oxygen (57 +/- 28 vs 29 +/- 23 days, p < 0.001), had higher incidence of patent ductus arteriosus (28/38 vs 18/52, p < 0.0003), and required surfactant therapy more often for respiratory distress syndrome (17/38 vs 11/52, p < 0.01), when compared with infants who did not receive dexamethasone. Severe ROP developed in 16 infants (stage III or higher); 12 of these were in the dexamethasone-treated group (p < 0.003). Thirteen infants required cryotherapy; nine were from the dexamethasone-treated group (p < 0.13). This study demonstrates an apparent association between the incidence of severe ROP and dexamethasone therapy. Prospective, randomized, controlled studies are needed to correct for differences in severity of cardiorespiratory illness to establish whether a causal role exists for steroid therapy in ROP. Until such studies are available, careful consideration must be given to indications, dosage, time of initiation, and duration of treatment with dexamethasone in extremely low birth weight infants.