Oxygen toxicity contributes to the pathogenesis of bronchopulmonary dysplasia (BPD). Neonatal mice exposed to hyperoxia develop a simplified lung structure that resembles BPD. Sustained activation of the transcription factor NFB and increased expression of protective target genes attenuates hyperoxia-induced mortality in adults. However, the effect of enhancing hyperoxia-induced NFB activity on lung injury and development in neonatal animals is unknown. We performed this study to determine whether sustained NFB activation, mediated through IBβ overexpression, preserves lung development in neonatal animals exposed to hyperoxia. Newborn WT and IBβ overexpressing (AKBI) were exposed to hyperoxia (>95%) or room air from day of life (DOL) 0-14, after which all animals were kept in room air. Survival curves were generated through DOL 14. Lung development was assessed using radial alveolar count (RAC) and mean linear intercept (MLI) at DOL 3 and 28 and pulmonary vessel density at DOL 28. Lung tissue was collected and NFB activity was assessed using Western blot for IB degradation and NFB nuclear translocation. WT mice demonstrated 80% mortality through 14 days of exposure. In contrast, AKBI mice demonstrated 60% survival. Decreased RAC, increased MLI and pulmonary vessel density caused by hyperoxia in WT mice was significantly attenuated in AKBI mice. These findings were associated with early and sustained NFB activation and expression of cytoprotective target genes, including VEGFR2. We conclude that sustained hyperoxia-induced NFB activation improves neonatal survival and preserves lung development. Potentiating early NFB activity after hyperoxic exposure may represent a therapeutic intervention to prevent BPD.