Meconium Aspiration Syndrome (MAS) is an important cause of neonatal morbidity and mortality. The present study was undertaken to evaluate the role of steroids in the management of MAS. This was a double blinded randomized controlled trial and a prospective Interventional Study over one-year period in the neonatal unit of the Lady Hardinge Medical College and associated Kalawati Saran Children's hospital. Fifty-one babies of MAS which were randomly distributed into three groups, Control, systemic and nebulized steroids. Methyl prednisolone was given i.v. in dose of 0.5 mg/kg/day in two divided doses. Budecort was given by nebulization in dose of 50 microgram 12 hourly. Infants were assessed in terms of duration of stay, oxygen dependence, X-ray clearances and also assessed for short term adverse effects. There was a statistically significant difference in the duration of stay, duration of oxygen dependence and radiological clearance. The use of steroids was not associated with an increased incidence of sepsis. The conclusion is that steroids alter the course of Meconium Aspiration Syndrome and favorably affect the outcome.