Prolonged hyperoxic exposure contributes to neonatal lung injury and airway hyperreactivity is characterized by enhanced contraction and impaired relaxation of airway smooth muscle. Our previous data demonstrate that hyperoxia in rat pups upregulates expression of brain-derived neurotrophic factor (BDNF) mRNA and protein, disrupts NO-cGMP signaling and impairs cAMP production in airway smooth muscle. We hypothesized that BDNF-tyrosine kinase B (TrkB) signaling plays a functional role in airway hyperreactivity via upregulation of cholinergic mechanisms in hyperoxia exposed lungs. Five-day old rat pups were exposed to 95% oxygen or room air for 7 days and administered daily K-252a (i.p., 50 µg/kg/day) to block BDNF/TrkB signaling, or vehicle. Lungs were removed for HPLC measurement of acetylcholine (ACh) or for in vitro force measurement of lung parenchymal strips. ACh content doubled in hyperoxic as compared to room air exposed lungs. K-252a treatment of hyperoxic pups restored ACh content to room air levels. Hyperoxia increased contraction and impaired relaxation of lung strips in response to incremental electrical field stimulation (EFS). K-252a administration to hyperoxic pups reversed this increase in contraction and decrease in relaxation. K-252a or TrkB-Fc was used to block the effect of exogenous BDNF in vitro. Both K-252a and TrkB-Fc blocked the effects of exogenous BDNF. Hyperoxia decreased cAMP and cGMP levels in lung strips and blockade of BDNF/TrkB signaling restored cAMP but not cGMP to control levels. Therefore, hyperoxia-induced increase in activity of BDNF-TrkB receptor signaling appears to play a critical role in enhancing cholinergically mediated contractile responses of lung parenchyma.