Late-outgrowth endothelial colony-forming cells (ECFCs), a type of circulating endothelial progenitor cell (EPC), may contribute to pulmonary angiogenesis during development. Cord blood ECFCs from preterm newborns proliferate more rapidly than term ECFCs but are more susceptible to the adverse effects of hyperoxia. Recent studies suggest that bone marrow-derived EPCs protect against experimental lung injury via paracrine mechanisms independent of vascular engraftment. To determine whether human umbilical cord blood ECFCs from preterm and term newborns have therapeutic benefit in experimental neonatal lung injury, we isolated cord blood ECFCs from full-term and preterm newborns and prepared ECFC-conditioned medium (CM) to test its therapeutic benefit on fetal pulmonary artery endothelial cell (PAEC) proliferation and function as well as alveolar type 2 (AT2) cell growth. PAECs and AT2 cells were isolated from late-gestation fetal sheep. Additionally, we administered both ECFCs and ECFC-CM to bleomycin-exposed newborn rats, an experimental model of bronchopulmonary dysplasia (BPD). Both term ECFC-CM and preterm ECFC-CM promoted cell growth and angiogenesis in vitro. However, when ECFC-CM was collected during exposure to mild hyperoxia, the benefit of preterm ECFC-CM was no longer observed. In the bleomycin model of BPD, treatment with ECFC-CM (or CM from mature EC) effectively decreased right ventricular hypertrophy but had no effect on alveolar septation. We conclude that term ECFC-CM is beneficial both in vitro and in experimental BPD. During oxidative stress, preterm ECFC-CM, but not term ECFC-CM, loses its benefit. The inability of term ECFC-CM to promote alveolarization may limit its therapeutic potential.