Summary This review article focuses on neonatal respiratory physiology, mechanical ventilation of the neonate and changes induced by anesthesia and surgery. Optimal ventilation techniques for preterm and term neonates are discussed. In summary, neonates are at high risk for respiratory complications during anesthesia, which can be explained by their characteristic respiratory physiology. Especially the delicate balance between closing volume and functional residual capacity can be easily disturbed by anesthetic and surgical interventions resulting in respiratory deterioration. Ventilatory strategies should ideally include application of an 'open lung strategy' as well avoidance of inappropriately high VT and excessive oxygen administration. In critically ill and unstable neonates, for example, extremely low-birthweight infants surgery in the neonatal intensive care unit might be an appropriate alternative to the operating theater. Best respiratory management of neonates during anesthesia is a team effort that should involve a joint multidisciplinary approach of anesthetists, pediatric surgeons, cardiologists, and neonatologists to reduce complications and optimize outcomes in this vulnerable population. © 2013 John Wiley & Sons Ltd.