Preterm infants are at high risk of developing ventilator-induced lung injury. We have used an animal model of in utero ventilation (IUV) to investigate the separate effects of ventilation and acute oxygen exposure on the very immature lung. Fetal sheep were ventilated in utero at 110 d gestation for 6 h with 100, 21, or 0% (100% nitrogen) oxygen (n = 5 each) and survived in utero, without further ventilation, until tissue collection at 118 d. Nonventilated 110 d and 118 d fetuses were used as controls. All IUV exposed fetuses had reduced secondary septal crest densities and increased elastin staining irrespective of the inspired oxygen concentration. IUV with 100% and 21% oxygen, but not 100% nitrogen, increased lung tissue volumes and myofibroblast differentiation and apoptosis within the distal lung parenchyma in a dose-dependent manner. This study shows that IUV without oxygen can reduce alveolarization, whereas ventilation with oxygen (6 h), even at levels found in air (21%), increases distal lung tissue volumes, elastin deposition, myofibroblast differentiation, and apoptosis.