Long-term effects of hypoxia are largely due to its modulatory effects on proliferation and differentiation of epithelial and endothelial cells, processes also regulated by the transforming growth factor (TGF)-beta system. We investigated the effects of hypoxia on the TGF-beta system in rat lungs from different developmental stages. Sprague-Dawley rats were exposed to 9.5% oxygen during either the first 2 wk of life or adulthood. Analysis revealed an arrest of alveolarization in hypoxic postnatal day 14 rats. Bioactive TGF-beta levels in bronchoalveolar lavage fluid were increased in these animals, and Western blot analysis revealed upregulation of TGF-beta receptor (TbetaR) I and II. None of these changes was observed in hypoxic adults. Hypoxia did, however, lead to decreased expression of TbetaRIII in both postnatal day 14 and adult rats. Immunohistochemical analysis localized TbetaRI-III predominantly to bronchiolar and alveolar epithelium; these patterns did not change with hypoxia. Thus we observed changes in TGF-beta activity and TbetaR isotype expression in rat lung that parallel the arrest in alveolarization seen with chronic hypoxia in early development. These alterations may partly explain the morphological changes observed in hypoxia.