1. Corticosterone plays a central role in maintaining homeostasis, promoting energy acquisition, and regulating the stress response in birds. Exposure to elevated levels of corticosterone during development can profoundly alter offspring behaviour and physiology, but the effects of elevated maternal corticosterone on offspring development remain poorly understood. 2. We tested two competing hypotheses concerning the effect of maternally derived corticosterone on growth and development of free-living house wrens: i) elevated maternal corticosterone causes damaging effects on nestling phenotype and fitness (collateral damage hypothesis) and (ii) increased maternal corticosterone enhances offspring fitness by preparing nestlings for the environment experienced by their mother (environmental/maternal-matching hypothesis). 3. We used a non-invasive means to increase maternal corticosterone by providing females with corticosterone-injected mealworms prior to and during egg production in the absence of any overt pre-natal maternal stress. To disentangle pre- and post-natal effects of this elevation in maternal corticosterone, we cross-fostered young in two experiments: i) nestlings of control and experimental females were reared by unmanipulated, natural females in a uniform maternal environment; ii) a split-brood design that enabled us to assess the interaction between the mother’s corticosterone treatment and that of the nestlings. 4. There were significant pre-natal effects of increased maternal corticosterone on nestling growth and survival. Offspring of females experiencing experimentally increased corticosterone were heavier and larger than offspring of control females. There also was a significant interaction between maternal corticosterone treatment and the corticosterone treatment to which young were exposed within the egg in their effect on nestling survival while in the nest; experimental young exhibited greater survival than control young, but only when reared by control mothers. There was also a significant effect of maternal corticosterone treatment on nestling stress reactivity and, in both experiments, on the eventual recruitment of offspring as breeding adults in the local population. 5. These patterns are broadly consistent with the environmental/maternal-matching hypothesis, and highlight the importance of disentangling pre- and post-natal effects of manipulations of maternal hormone levels on offspring phenotype.