Congenital lobar emphysema (CLE) is a potentially reversible, though life-threatening cause of respiratory distress in neonates. It is a rare developmental anomaly of the lower respiratory tract. A 10-month-old child presented with fever, cough and difficulty in breathing. Respiratory system examination revealed tachypnea with intercostal retraction, decreased breath sounds over the left upper lobe and room air saturation of 95%. Chest radiograph and computed tomography showed hyperinflated left upper zones with mediastinal shift. Left thoracotomy, followed by left upper lobectomy was performed under general anesthesia with one lung ventilation. Oxygen saturation, blood pressure, electrocardiogram and capnogram were continuously monitored. During anesthesia, conventionally positive pressure ventilation is avoided until the diseased lobe is isolated, however we adopted gentle manual ventilation maintaining the airway pressure before thoracotomy as described by Coté and Payne et al. Successful anesthetic management of CLE can be achieved by proper understanding of pathophysiology, good perioperative monitoring, and adopting novel management strategies.