Bronchopulmonary dysplasia (BPD) is the main complication of extreme prematurity, resulting in part from mechanical ventilation and oxygen therapy. Currently, no specific treatment exists for BPD. BPD is characterized by an arrest in alveolar development and increased apoptosis of alveolar epithelial cells (AECs). Type 2 AECs are putative distal lung progenitor cells, capable of regenerating alveolar homeostasis after injury. We hypothesized that the protection of AEC2 death via the activation of the prosurvival Akt pathway prevents arrested alveolar development in experimental BPD. We show that the pharmacologic inhibition of the prosurvival factor Akt pathway with wortmannin during the critical period of alveolar development impairs alveolar development in newborn rats, resulting in larger and fewer alveoli, reminiscent of BPD. Conversely, in an experimental model of BPD induced by oxygen exposure of newborn rats, alveolar simplification is associated with a decreased activation of lung Akt. In vitro studies with rat lung epithelial (RLE) cells cultured in hyperoxia (95% O₂) showed decreased apoptosis and improved cell survival after the forced expression of active Akt by adenovirus-mediated gene transfer. In vivo, adenovirus-mediated Akt gene transfer preserves alveolar architecture in the newborn rat model of hyperoxia-induced BPD. We conclude that inhibition of the prosurvival factor Akt disrupts normal lung development, whereas the expression of active Akt in experimental BPD preserves alveolar development. We speculate that the modulation of apoptosis may have therapeutic potential in lung diseases characterized by alveolar damage.