Bronchopulmonary dysplasia (BPD), a major cause of morbidity in premature infants, is characterized by arrest of lung growth and inhibited alveologenesis. We had earlier cloned late-gestation lung 1 (LGL1), a glucocorticoid (GC)-induced, developmentally regulated gene in lung mesenchyme, and showed that reduced levels of late-gestation lung 1 protein (lgl1) inhibit lung branching. Maximal fetal expression of LGL1 is concordant with the onset of alveolar septation, suggesting an additional role for lgl1 in alveologenesis. At postnatal d 7, during the period of maximal septation in postnatal rat lung, lgl1 concentrates at the tips of budding secondary alveolar septa. We studied two models of impaired postnatal alveologenesis generated by exposure of newborn rats to 60% O2 for 2 wk or 95% O2 for 1 wk. A profound decrease of lgl1 expression with oxygen exposure was observed in both animal models. Animals exposed to 95% O2 for 1 wk recovered in air over a 3-wk period, associated with normalization of lgl1 levels. Changes in lung levels of alpha-actin (a marker of myofibroblast differentiation associated with alveologenesis) and the mesenchymal marker vimentin were significant but less marked. Our findings support a role for lgl1 in postnatal lung development. We speculate that deficiency of lgl1 contributes to the arrested alveolar partitioning observed in BPD and that recovery is associated with normalization of lgl1 levels.