Abstract Bronchopulmonary dysplasia (BPD) is the most common complication of prematurity whose incidence is on the rise associated with the increased survival of extremely preterm infants. The etiology of BPD is multifactorial resulting from prenatal risk factors such as preeclampsia, chorioamnionitis, and perinatal insults including oxygen exposure, infection, and mechanical ventilation. Inflammation is a key pathway underlying the pathogenesis of BPD which can result in significant long-term multisystem morbidities, including adverse neurological outcomes, immune dysregulation with susceptibility to infections, and pulmonary morbidities including asthma and, in some cases, emphysematous changes that persist into adulthood. Thus, BPD is no longer considered a lung disease of the neonatal period, but a complex condition with multiorgan involvement and lifelong consequences. To date, effective treatments are lacking and there is a need to deliver effective strategies for the prevention and management of BPD. Mesenchymal stem/stromal cells (MSCs) are in clinical trials as potential cellular therapy for BPD. We and others have shown that the main therapeutic modality of MSCs resides in their secretome represented by `small' extracellular vesicles (sEVs), an EV subset that includes exosomes. We demonstrated that treatment with purified human MSC-derived sEvs, termed MEx, ameliorated and even reversed core histological and functional outcomes of BPD in several experimental models. In the neonatal hyperoxia (HYRX) murine BPD model, MEx protected other organs from injury including the brain, retina, and the thymus whose architecture was disrupted by HYRX. We demonstrated that MEx localize in the lung and interact with myeloid cells altering their phenotype from proinflammatory to immunosuppressive. Importantly, adoptive transfer of in vitro MEx-educated bone marrow derived myeloid cells, but not naïve cells, restored alveolar architecture, blunted fibrosis and vascular remodeling, and improved exercise capacity. We hypothesize that MEx regulate the immune landscape of the developing lung and promote a distinct macrophage phenotype that, through release of anti-inflammatory cytokines and enhanced efferocytosis of apoptotic cells, resolves tissue inflammation and orchestrates signals to promote lung growth disrupted by HYRX. In this proposal we plan to (1) Elucidate mechanisms by which MEx promote the establishment of the alveolar macrophage niche and development of innate immunity that is disrupted by neonatal HYRX; (2) Explore the functionality of lung myeloid cells instructed by MEx in resolving inflammation and promoting lung development; and (3) Elucidate the effects of neonatal HYRX and MEx treatment on long term immune cell function and susceptibility to airway disease.