Low oxygen stimulates pulmonary vascular development and airway branching and involves Hypoxia Inducible Factor (HIF). HIF is stable and initiates expression of angiogenic factors under hypoxia, whereas normoxia triggers hydroxylation of the HIF-1 subunit by proline hydroxylases (PHDs) and subsequent degradation. Herein, we investigated whether chemical stabilization of HIF-1 under normoxic (20% O₂) conditions would stimulate vascular growth and branching morphogenesis in early lung explants. Tie2-LacZ mice were used for visualization of the vasculature. E11.5 lung buds were dissected and cultured in 20% O₂ in the absence or presence of cobalt chloride (CoCl₂; a hypoxia mimetic), dimethyloxalylglycine (DMOG, a non-specific inhibitor of PHDs) or desferrioxamine (DFO; an iron chelator). Vascularization was assessed by X-gal staining and terminal buds were counted. The fine vascular network surrounding the developing lung buds seen in control explants disappeared in CoCl₂ and DFO treated explants. Also, epithelial branching was reduced in the explants treated with CoCl₂ and DFO. In contrast, DMOG inhibited branching, but stimulated vascularization. Both DFO and DMOG increased nuclear HIF-1 protein levels, whereas CoCl₂ had no effect. Since HIF-1 induces vascular growth factor (VEGF) expression, the effect of SU5416, a potent VEGF receptor blocker, on early lung development was also investigated. Inhibition of VEGFR2 signalling in explants maintained under hypoxic (2% O₂) conditions completely abolished vascularization and slightly decreased epithelial branching. Taken together, the data suggest that DMOG stabilization of HIF-1 during early development leads to a hypervascular lung and that airway branching proceeds without the vasculature, albeit at a slower rate.