Decreased lung vascular growth and pulmonary hypertension contribute to poor outcomes in congenital diaphragmatic hernia (CDH). Mechanisms that impair angiogenesis in CDH are poorly understood. We hypothesize that decreased vessel growth in CDH is caused by pulmonary artery endothelial cell (PAEC) dysfunction with loss of a highly proliferative population of PAECs (HP-PAEC). PAECs were harvested from near term fetal sheep that underwent surgical disruption of the diaphragm at 60-70 days gestational age. Highly proliferative potential was measured via single cell assay. PAEC function was assessed by assays of growth and tube formation and response to known pro-angiogenic stimuli, vascular endothelial growth factor (VEGF) and nitric oxide (NO). Western blot analysis was used to measure content of angiogenic proteins and superoxide production was assessed. By single cell assay, the proportion of HP-PAEC with growth of >1000 cells was markedly reduced in the CDH PAEC, from 29% (controls) to 1% (CDH) (P < 0.0001). In comparison with controls, CDH PAEC growth and tube formation were decreased by 31% (P = 0.012) and 54% (P < 0.001), respectively. VEGF and NO treatments increased CDH PAEC growth and tube formation. VEGF and VEGF-R2 proteins were increased in CDH PAEC; however, eNOS and extracellular superoxide dismutase proteins were decreased by 29% and 88%, respectively. We conclude that surgically-induced CDH in fetal sheep causes endothelial dysfunction and marked reduction of the HP-PAEC population. We speculate that this CDH PAEC phenotype contributes to impaired vascular growth in CDH.