Bronchopulmonary dysplasia (BPD) is the chronic lung disease of infancy that follows ventilator and oxygen therapy for acute respiratory failure after premature birth. Recently, infants with ”New BPD” have a far different clinical course and pathology than had been observed in infants with ”classic BPD” in the past. Infants with ”New BPD” now have less severe acute respiratory disease, and at autopsy, lung histology is predominantly characterized by arrested lung development, including impaired alveolar and vascular growth. Mechanisms that inhibit distal lung growth are poorly understood, but recent clinical and laboratory studies suggest that impaired vascular endothelial growth factor signaling and reduced nitric oxide (NO) production decreases alveolar and vessel growth in the developing lung, features observed in experimental oxygen-induced BPD. Therapy enhancing VEGF/NO signaling may be a potential way to treat diseases associated with impaired alveolar structures.