Surfactant dysfunction has been demonstrated in clinical and experimental studies of acute lung injury (ALI) and acute respiratory distress syndrome (ARDS). Inflammatory mediators, alveolar exudation, capillary endotheliopathy, and various other mechanisms have been indicted as the cause of surfactant dysfunction. In addition, loss of biophysical activity and damage to the type II alveolar cells leads to altered surfactant production, secretion, and recycling. These factors provide the conceptual rationale for administering exogenous surfactant in ALI/ARDS. Studies of surfactant replacement therapy in ALI/ARDS in children have shown improvement in various parameters of pulmonary function. Multiple simultaneous interventions in the treatment of ALI/ARDS have improved survival and outcomes. The objective of this review is to address the current literature and evidence supporting the administration of exogenous surfactant in the treatment of children with ARDS/ALI.