The use of diuretics is extremely frequent in sick neonates, the more so in very premature newborn infants. The use of diuretics in patients whose kidney function is immature necessitates a thorough knowledge of renal developmental physiology and pathophysiology. This review presents the basic aspects of body fluid homeostasis in the neonate, discusses the development of kidney function, and describes the mechanisms involved in electrolyte and water reabsorption along the nephron. Diuretics are then classified according to the site of their action on sodium reabsorption. The use of diuretics in sodium-retaining states, in oliguric states, in electrolyte disorders, and in arterial hypertension, as well as in a few specific disorders, is presented. Common and specific adverse effects are discussed. Recommended dosages for the main diuretics used in the neonatal period are given. New developments in diuretic therapy are briefly mentioned.