We recently showed that platelet activating factor (PAF) is an important modulator of pulmonary vasomotor tone in the fetus, with a significant decrease in circulating PAF levels in the immediate newborn period. In this study, we have determined PAF catabolism by PAF acetylhydrolase (PAF-Ah) in lungs of near-term fetal and newborn 2- to 16-h (<1 day) and 6- to 12-day-old lambs. The rate of PAF catabolism by lung homogenate protein from the three groups of lamb lungs was studied at 37°C in 30 mM Tris buffer, pH 7.5, containing 0.01% BSA. Each lung homogenate protein was incubated for 10 min with 50 μM [ 3 H]acetyl-PAF at pO 2 <50 Torr (hypoxia) and ∼100 Torr (normoxia). PAF-Ah activity was quantified as amount of lyso-PAF produced. PAF-Ah activity (means ± SEM, nmol lyso-PAF/min/mg protein) in fetal lung homogenate was 1.19 ± 0.14 and 2.46 ± 0.05 during hypoxia and normoxia, respectively. The corresponding values for the newborns were newborn <1 day, 1.65 ± 0.26 and 2.95 ± 0.07 and newborn 6–12 days, 1.25 ± 0.10 and 2.84 ± 0.05. In all groups, PAF-Ah activity was higher in normoxia than in hypoxia. During normoxia, PAF-Ah activity in newborn <1 day was significantly higher than the activity in fetus, but similar to the activity in newborn 6- to 12-day-old lamb lungs. These data show a significant up-regulation of PAF-Ah activity in lungs in the immediate newborn period. PAF-Ah gene expression measured by RT-PCR showed a significant up-regulation of the PAF-Ah gene in lungs of lambs <1 day old, suggesting a transcriptional regulation of the PAF-Ah gene in the immediate newborn period. These results suggest that up-regulation of PAF-Ah activity after birth with oxygenation will result in a decrease in circulating PAF levels, thereby facilitating the fall in pulmonary vascular resistance in the immediate newborn period.