To survive the transition to extrauterine life, newborn infants must have lungs that provide an adequate surface area and volume to allow for gas exchange. The dynamic activities of fetal breathing movements and accumulation of lung luminal fluid are key to fetal lung development throughout the various phases of lung development and growth, first by branching morphogenesis, and later by septation. Because effective gas exchange is essential to survival, pulmonary hypoplasia is among the leading findings on autopsies of children dying in the newborn period. Management of infants born prematurely who had disrupted lung development, especially at the pre-glandular or canalicular periods, may be challenging, but limited success has been reported. Growing understanding of stem cell biology and mechanical development of the lung, and how to apply them clinically, may lead to new approaches that will lead to better outcomes for these patients.