Vagally mediated afferent feedback and compliant lungs (surfactant system) play vital roles in the establishment of adequate alveolar ventilation and pulmonary gas exchange at birth. Although the significance of vagal innervation in the establishment of normal breathing patterns is well recognized, the precise role of lung innervation in the maturation of the surfactant system remains unclear. The specific aim of the current study was to investigate whether vagal denervation compromises the surfactant system during fetal development. Experiments were performed on 12 time-dated fetal sheep; eight underwent cervical vagal denervation and four were sham-operated. Vagal denervation was performed at 110-113d gestation. Fetal lambs were instrumented in-utero to record arterial pH and blood-gas tensions. The animals were delivered by cesarean section under general anesthesia between 130-133d gestation (term ~147 d). Lung samples were collected for wet-dry ratios, light and electron microscopy and overall lung morphology. In addition, total proteins, total phospholipids and surfactant proteins A and B were analyzed in both lung tissue and bronchoalveolar lavage fluid. Vagal denervation had no effect on alveolar architecture, including type II cells or the morphology of lamellar bodies within them. Furthermore, surfactant proteins A and B, and total phospholipids were similar in lung tissue and bronchoalveolar lavage fluid between the two groups. A significant correlation was observed between circulating cortisol concentrations and surfactant proteins in the bronchoalveolar lavage fluid and lung tissue. We provide definitive evidence that vagal innervation at mid gestation is not required for maturation of the pulmonary surfactant system during fetal development.