Chorioamnionitis is frequently associated with preterm birth and increases the risk of adverse outcomes such as bronchopulmonary dysplasia (BPD). Transforming growth factor (TGF)-1 is a key regulator of lung development, airway remodelling, lung fibrosis and regulation of inflammation, and all these processes contribute to the development of BPD. Connective tissue growth factor (CTGF) is a down-stream mediator of some of the pro-fibrotic effects of TGF-1, of vascular remodelling and of angiogenesis. TGF-1 induced CTGF expression can be blocked by tumor necrosis factor (TNF)-. We asked if chorioamnionitis associated antenatal inflammation would regulate TGF-1, the TGF-1 signalling pathway and CTGF in preterm lamb lungs. Fetal sheep were exposed to 4 mg intra-amniotic endotoxin or saline for 5 h, 24 h, 72 h or 7 days before preterm delivery at 125 days gestation age (term is 150 days). Intra-amniotic endotoxin increased lung TGF-1 mRNA and protein expression. Elevated TGF-1 levels were associated with a TGF-1-induced phosphorylation of Smad2. CTGF was selectively expressed in lung endothelial cells in control lungs and intra-amniotic endotoxin caused CTGF expression to decrease to 30% of control values and TNF- protein to increase. The antenatal inflammation induced TGF-1 expression and Smad signalling in the fetal lamb lung may contribute to impaired lung alveolarization and to reduced lung inflammation. Decreased CTGF expression may inhibit vascular development or remodelling and limit lung fibrosis during remodelling. These effects may contribute to the impaired alveolar and pulmonary vascular development that is the hallmark of the new form of BPD.