Sustained lung inflations (SI) at birth may recruit functional residual capacity (FRC). Clinically, SI increase oxygenation and decrease need for intubation in preterm infants. We tested whether a SI to recruit FRC would decrease lung injury from subsequent ventilation of fetal, preterm lambs. The preterm fetus (128 ± 1 day gestation) was exteriorized from the uterus, a tracheostomy was performed, and fetal lung fluid was removed. While maintaining placental circulation, fetuses were randomized to one of four 15-min interventions: 1) positive end-expiratory pressure (PEEP) 8 cmH2O ( n = 4), 2) 20 s SI to 50 cmH2O then PEEP 8 cmH2O ( n = 10), 3) mechanical ventilation at tidal volume (VT) 7 ml/kg ( n = 13), or 4) 20 s SI then ventilation at VT 7 ml/kg ( n = 13). Lambs were ventilated with 95% N2/5% CO2 and PEEP 8 cmH2O. Volume recruitment was measured during SI, and fetal tissues were collected after an additional 30 min on placental support. SI achieved a mean FRC recruitment of 15 ml/kg (range 8–27). Fifty percent of final FRC was achieved by 2 s, 65% by 5 s, and 90% by 15 s, demonstrating prolonged SI times are needed to recruit FRC. SI alone released acute-phase proteins into the fetal lung fluid and increased mRNA expression of proinflammatory cytokines and acute-phase response genes in the lung. Mechanical ventilation further increased all markers of lung injury. SI before ventilation, regardless of the volume of FRC recruited, did not alter the acute-phase and proinflammatory responses to mechanical ventilation at birth.