Bronchopulmonary dysplasia and emphysema are significant global health problems at the extreme stages of life. Both are characterized by arrested alveolar development or loss of alveoli, respectively. Both lack effective treatment strategies. Knowledge about the genetic control of branching morphogenesis in mammals derives from investigations of the respiratory system in Drosophila, but mechanisms that regulate alveolar development remain poorly understood. Even less is known about regulation of the growth and development of the pulmonary vasculature. Understanding how alveoli and the underlying capillary network develop, and how these mechanisms are disrupted in disease states, are critical for developing effective therapies for lung diseases characterized by impaired alveolar structure. Recent observations have challenged old notions that the development of the blood vessels in the lung passively follows that of the airways. Rather, increasing evidence suggests that lung blood vessels actively promote alveolar growth during development and contribute to the maintenance of alveolar structures throughout postnatal life. Our working hypothesis is that disruption of angiogenesis impairs alveolarization, and that preservation of vascular growth and endothelial survival promotes growth and sustains the architecture of the distal airspace. Furthermore, the explosion of interest in stem cell biology suggests potential roles for endothelial progenitor cells in the pathogenesis or treatment of lung vascular disease. In this Pulmonary Perspective, we review recent data on the importance of the lung circulation, specifically examining the relationship between dysmorphic vascular growth and impaired alveolarization, and speculate on how these new insights may lead to novel therapeutic strategies for bronchopulmonary dysplasia.