Congenital lobar emphysema (CLE) is a rare clinical entity that usually presents as acute respiratory distress. It is potentially reversible, though possibly life-threatening, cause of respiratory distress in the neonate. It poses dilemma in diagnosis and management. We are presenting a 40 days old baby who presented with a sudden onset of respiratory distress related to CLE affecting the left upper lobe. Lobectomy was performed under general anaesthesia with spontaneous and controlled lung ventilation. Strategies to prevent hyperinflation and anaesthetic consideration of various techniques adopted for lung separation in infants have been reviewed.