A sustained inflation (SI) facilitates lung aeration after birth but may impair the neonatal cardiovascular transition. We aimed to determine the effect of an initial SI on pulmonary arterial and carotid blood flow (PBF and CBF) after preterm birth. Fetal sheep were instrumented at ∼ 122 d of gestation (d). Lambs were delivered at ∼ 127 d and received either an initial SI (40 cm H2O for 1 min or until a volume of 20 mL/kg was administered) followed by ventilation for 30 min (SI; n = 7) or ventilation for 30 min (non-SI; n = 6). At 10 min after ventilation onset, inspired O2 content increased from 21 to 100% for 10 min. PBF, CBF, pulmonary arterial and carotid pressures, tidal volume, and inspiratory pressures were recorded. PBF was greater during the SI (p < 0.05) but thereafter was similar between groups. Non-SI lambs were hypoxemic and had higher CBF than SI lambs (p < 0.05). Cerebral oxygen delivery was constant in SI lambs but increased ∼ 4-fold in non-SI lambs during ventilation with 100% O2 (p < 0.05). Lung compliance and respiratory status were better in SI than non-SI lambs (p < 0.05). A SI improved lung function without adverse circulatory effects, seemed to stabilize neonatal cerebral O2 delivery, and may protect against cerebral hyperoxia.