Preterm birth affects 8–10% of human pregnancies and is a major cause of long‐term disability. Individuals who are born very preterm, especially if they develop bronchopulmonary dysplasia (BPD), have an increased risk of impaired lung function in infancy, childhood and adulthood, as well as an increased risk of respiratory illness. Our aim is to briefly review current understanding of the basis for long‐term impairments in lung function and respiratory health following preterm birth and BPD. Histopathology of the lungs of infants and children following preterm birth and BPD shows altered development of the lung parenchyma, conducting airways and pulmonary vasculature. Owing to improvements in the care of preterm infants, especially the use of exogenous surfactant and lower concentrations of administered oxygen, lung pathology following preterm birth and BPD is less severe than in the past. Recent studies indicate that very preterm birth and BPD can lead to hyperplasia of airway smooth muscle, impaired alveolarization, pulmonary inflammation and an increase in pulmonary artery muscularization. Imaging of adult lungs suggests that the deficit in alveoli can persist into later life. Long‐term lung injury apparently relates to the use of mechanical ventilation and the use of supplemental oxygen in infancy. Impaired lung function in later life is due to airway hyper‐reactivity and fewer alveoli, resulting in reductions in the surface area for gas exchange and physical support for bronchioles. Because the incidence of preterm birth is not declining, it will continue to be a major cause of respiratory ill‐health in adults.