Background: Chronic respiratory conditions, including neonatal respiratory distress syndrome (RDS), are strongly influenced by surfactant deficiency, a common complication in preterm infants. Antenatal corticosteroids like dexamethasone are routinely used to enhance fetal lung maturity, but their effects on surfactant lipid levels and pulmonary function require further investigation. To evaluate the impact of antenatal dexamethasone on surfactant lipid levels, pulmonary function, and neonatal respiratory outcomes in preterm infants. Methodology: This cross-sectional analytical study was conducted at Lady Reading Hospital, Peshawar, from January 2023 to January 2024. 120 preterm infants (<37 weeks gestational age) were categorized based on antenatal dexamethasone exposure. Data collected included gestational age, birth weight, biochemical markers (surfactant lipids, lecithin/sphingomyelin ratio, surfactant protein-A levels), and pulmonary function parameters (lung compliance, airway resistance, oxygenation index). Neonatal outcomes, such as the incidence of RDS, bronchopulmonary dysplasia (BPD), and mortality, were also analyzed. Results: Surfactant lipid levels were significantly lower in the dexamethasone group (25.6 ± 4.3 mg/mL) compared to the non-dexamethasone group (30.2 ± 5.0 mg/mL; p = 0.001). Pulmonary compliance ‘was reduced (0.55 ± 0.1 vs. 0.65 ± 0.1 mL/cm H₂O; p = 0.008), and airway resistance was higher in the dexamethasone group (2.8 ± 0.5 vs. 2.5 ± 0.4 cm H₂O/L/sec; p = 0.017)’. Despite improved lung maturity markers in some cases, the dexamethasone group showed higher rates of RDS and prolonged mechanical ventilation. Conclusion: While antenatal dexamethasone facilitates fetal lung maturity, its association with reduced surfactant lipid levels and compromised pulmonary function highlights the need for a cautious, individualized approach. Optimizing antenatal corticosteroid use could mitigate potential risks while maximizing benefits for preterm infants.