We describe a preterm girl with severe respiratory distress syndrome, which was managed with mechanical ventilation. She developed severe ventilator induced lung injury, causing extensive unilateral emphysema. CT-scan of the lungs corresponded with extensive pneumatoceles. She was managed conservatively, using neurally adjusted ventilatory assist, with success and was extubated on day of life 38. She was discharged home without any respiratory support at 39 weeks of postmenstrual age. Our case illustrates the ongoing risk of severe ventilator induced lung injury and highlights a unique injury pattern in a preterm newborn that was managed conservatively using neurally adjusted ventilatory assist with an excellent outcome.