Hemangiomatosis involving the pleura is a rare cause of bloody pleural effusion in the neonate. When congestive heart failure and consumption coagulopathy are associated, the prognosis is particularly grave. Corticosteroids and radiation therapy have been reported to shrink hemangiomas. We present such a case in a 2.5-mo-old whose condition did not appear to respond to prednisone or radiation therapy but resolved quickly when cyclophosphamide was given. In this case cyclophosphamide appeared to be life saving.