Intrauterine growth restriction (IUGR) induced by placental restriction (PR) in sheep leads to chronic hypoxemia and reduced surfactant maturation. The underlying molecular mechanism involves altered regulation of hypoxia signaling by increased prolyl hydroxylase domain (PHD) expression. Here, we evaluated the effect of intratracheal administration of the PHD inhibitor, dimethyloxalylglycine (DMOG), on functional, molecular and structural determinants of lung maturation in the Control and PR sheep fetus. There was no effect of DMOG on fetal blood pressure or fetal breathing movements. DMOG reduced lung expression of genes regulating hypoxia signaling (HIF-3α, ACE1), anti-oxidant defence (CAT), lung liquid reabsorption (SCNN1-A, ATP1-A1, AQP-1, AQP-5) and surfactant maturation (SFTP-A, SFTP-B, SFTP-C, PCYT1A, LPCAT, ABCA3, LAMP3) in Control fetuses. There were very few effects of DMOG on gene expression in the PR fetal lung (reduced lung expression of angiogenic factor ADM, water channel AQP-5 and increased expression of glucose transporter SLC2A1). DMOG administration in Controls reduced total lung lavage phosphatidylcholine to the same degree as in PR fetuses. These changes appear to be regulated at the molecular level as there was no effect of DMOG on the percent tissue, air space or numerical density of SFTP-B positive cells in the Control and PR lung. Hence, DMOG administration mimics the effects of PR in reducing surfactant maturation in the lung of Control fetuses. The limited responsiveness of the PR fetal lung suggests a potential biochemical limit or reduced plasticity to respond to changes in regulation of hypoxia signaling following exposure to chronic hypoxemia in utero.