Morbidity and mortality for neonates with congenital diaphragmatic hernia-associated pulmonary hypoplasia remains high. These patients may be deficient in vascular endothelial growth factor (VEGF). Our lab previously established that exogenous VEGF164 accelerates compensatory lung growth (CLG) after left pneumonectomy in a murine model. We aimed to further investigate VEGF-mediated CLG by examining the role of the heparin-binding domain (HBD). Eight-week-old, male, C57BL/6J mice underwent left pneumonectomy, followed by post-operative and daily intraperitoneal injections of equimolar VEGF164 or VEGF120, which lacks the HBD. Isovolumetric saline was used as a control. VEGF164 significantly increased lung volume, total lung capacity, and alveolarization, while VEGF120 did not. Treadmill exercise tolerance testing (TETT) demonstrated improved functional outcomes post-pneumonectomy with VEGF164 treatment. In lung protein analysis, VEGF treatment modulated downstream angiogenic signaling. Activation of epithelial growth factor receptor and pulmonary cell proliferation was also upregulated. Human microvascular lung endothelial cells (HMVEC-L) treated with VEGF demonstrated decreased potency of VEGFR2 activation with VEGF121 treatment compared to VEGF165 treatment. Taken together, these data indicate that the VEGF HBD contributes to angiogenic and proliferative signaling, is required for accelerated compensatory lung growth, and improves functional outcomes in a murine CLG model.