Bronchopulmonary dysplasia (BPD) is a chronic lung disease in infants born extremely preterm, typically before 28 weeks' gestation, characterized by a prolonged need for supplemental oxygen or positive pressure ventilation beyond 36 weeks postmenstrual age. The limited number of autopsy samples available from infants with BPD in the postsurfactant era has revealed a reduced capacity for gas exchange resulting from simplification of the distal lung structure with fewer, larger alveoli because of a failure of normal lung alveolar septation and pulmonary microvascular development. The mechanisms responsible for alveolar simplification in BPD have not been fully elucidated, but mounting evidence suggests that aberrations in the cross-talk between growth factors of the lung mesenchyme and distal airspace epithelium have a key role. Animal models that recapitulate the human condition have expanded our knowledge of the pathology of BPD and have identified candidate matrix components and growth factors in the developing lung that are disrupted by conditions that predispose infants to BPD and interfere with normal vascular and alveolar morphogenesis. This review focuses on the deviations from normal lung development that define the pathophysiology of BPD and summarizes the various candidate mesenchyme-associated proteins and growth factors that have been identified as being disrupted in animal models of BPD. Finally, future areas of research to identify novel targets affected in arrested lung development and recovery are discussed. Birth Defects Research (Part A), 2012. © 2011 Wiley Periodicals, Inc.