Lung hypoplasia and congenital diaphragmatic hernia (CDH) represent an unsolved clinical and scientific problem. Early lung morphogenesis is coupled to development and function of pulmonary smooth muscle. Activity of the latter is abnormal from the earliest stages of hypoplastic lung development and before supervening CDH. A "smooth muscle hypothesis" is advanced to help explain embryonic lung malformations, fetal failure of lung growth, and postnatal susceptibility to barotrauma, airway hyperreactivity, and pulmonary hypertension in CDH. Exploring the interaction of smooth muscle function and airway pressures may help optimise tracheal occlusion and provide support for both an adequately powered trial of glucocorticoids and also for experimental "preventilation" strategies in fetal CDH.