Chorioamnionitis is frequently associated with preterm birth and increases the risk of adverse outcomes such as bronchopulmonary dysplasia (BPD). Transforming growth factor (TGF)-beta1 is a key regulator of lung development, airway remodeling, lung fibrosis, and regulation of inflammation, and all these processes contribute to the development of BPD. Connective tissue growth factor (CTGF) is a downstream mediator of some of the profibrotic effects of TGF-beta1, vascular remodeling, and angiogenesis. TGF-beta1-induced CTGF expression can be blocked by TNF-alpha. We asked whether chorioamnionitis-associated antenatal inflammation would regulate TGF-beta1, the TGF-beta1 signaling pathway, and CTGF in preterm lamb lungs. Fetal sheep were exposed to 4 mg of intra-amniotic endotoxin or saline for 5 h, 24 h, 72 h, or 7 days before preterm delivery at 125 days gestation (full term = 150 days). Intra-amniotic endotoxin increased lung TGF-beta1 mRNA and protein expression. Elevated TGF-beta1 levels were associated with TGF-beta1-induced phosphorylation of Smad2. CTGF was selectively expressed in lung endothelial cells in control lungs, and intra-amniotic endotoxin caused CTGF expression to decrease to 30% of control values and TNF-alpha protein to increase. The antenatal inflammation-induced TGF-beta1 expression and Smad signaling in the fetal lamb lung may contribute to impaired lung alveolarization and reduced lung inflammation. Decreased CTGF expression may inhibit vascular development or remodeling and limit lung fibrosis during remodeling. These effects may contribute to the impaired alveolar and pulmonary vascular development that is the hallmark of the new form of BPD.