PURPOSE To determine the levels of TNFa and IL-1beta in tracheal aspirates of neonates with meconium aspiration syndrome (MAS) and to ascertain whether the use of steroids by systemic or nebulized routes suppresses the levels of these inflammatory markers. METHODS This was a double blind, randomized, controlled, prospective, interventional study done over one year period in the neonatal unit of the Lady Hardinge Medical College. Fifty-one babies of MAS which were randomly distributed into three groups; control, systemic and nebulized steroids; were included in the study. Methyl prednisolone was given intravenously in the dosage of 0.5 mg/kg/day in two divided doses while nebulized budecort was given in a dosage of 50 mcg/dose twice daily. Tracheal aspirates were taken on day 1, 3 and 4 and were analyzed for TNFa and IL-1b by ELISA technique. RESULTS TNFa in tracheal aspirates showed an increasing trend in babies of MAS in first four days, thereby signifying an inflammatory process underlying the condition. The levels of TNFa were suppressed by use of steroids. Higher levels of TNFa were associated with longer stay in hospital. IL-1b did not show any significant correlation. CONCLUSIONS TNFa is associated with meconium-associated inflammation. Its level is suppressed with the use of steroids and can also be used to assess prognosis of neonates with MAS.