Bronchopulmonary dysplasia (BPD)/chronic lung disease occurs primarily in very low birth weight infants (VLBW) often without antecedent severe respiratory distress syndrome. The BPD in these VLBW infants results in less fibrosis than the traditional BPD but the normal process of alveolarization seems to be disrupted. This review develops the thesis that BPD in VLBW infants results from inflammatory mediators interfering with the signaling required for normal late gestational lung development. Proinflammatory mediators may be elevated because of fetal exposure, postnatal infection or by release from preterm lungs ventilated at either low or high lung volumes. The preterm lung is highly susceptible to injury during resuscitation or more chronic mechanical ventilation because the gas volumes/kg body weight of the lungs are small. An understanding of what causes cytokine release and how cytokines influence lung development is necessary to develop targeted therapies to minimize BPD. However, care strategies that minimize inflammation and ventilator-induced lung injury should help decrease BPD.