Pulmonary injury is associated with the disruption of alveologenesis in the developing lung and causes bronchopulmonary dysplasia (BPD) in prematurely born infants. TGF- is an important regulator of cellular differentiation and early lung development and its levels are increased in newborn lung injury. Although over-expression of TGF- in the lungs of newborn animals causes pathological features that are consistent with BPD, the role of endogenous TGF- in the inhibition of the terminal stage of lung development is incompletely understood. In this investigation, the hypothesis that O₂-induced injury of the maturing lung is associated with TGF--mediated disruption of alveologenesis and microvascular development was tested using a murine model of BPD. Here we report that treatment of developing mouse lungs with TGF--neutralizing antibodies attenuates the increase in pulmonary cell phospho-Smad2 nuclear localization, which is indicative of augmented TGF- signaling, associated with pulmonary injury induced by chronic inhalation of 85% oxygen. Importantly, the neutralization of the abnormal TGF- activity improves quantitative morphometric indicators of alveologenesis, extracellular matrix assembly, and microvascular development in the injured developing lung. Furthermore, exposure to anti-TGF- antibodies is associated with improved somatic growth in hyperoxic mouse pups and not with an increase in pulmonary inflammation. These studies indicate that excessive pulmonary TGF- signaling in the injured newborn lung has an important role in the disruption of the terminal stage of lung development. In addition, they suggest that anti-TGF- antibodies may be an effective therapy for preventing some important developmental diseases of the newborn lung.