The effect of smooth muscle tone on the functional characteristics of neonatal airways was studied in six newborn lambs. Tracheal mechanics, resistance, and collapsibility were determined in tracheal segments of uniform length which were surgically isolated just caudal to the cricoid cartilage. Resistance to airflow through uncompressed (zero transmural pressure) and compressed (increased transmural pressure) trachea was evaluated over a range of physiological flows both before and after induced contraction of airway smooth muscle. Results demonstrate that neonatal tracheal smooth muscle does respond to cholinergic stimulation and that there was a significant decrease in airway compliance. Furthermore, the consequent increase in airway rigidity may play a role in resisting collapse or compression of the intrathoracic airway during expiration.