Premature infants exposed to ventilation are at risk of developing bronchopulmonary dysplasia and persistent lung disease in childhood. We report where injury occurred within the lung after brief ventilation at birth. Preterm sheep (129 d gestation) were ventilated with an escalating tidal volume to 15 mL/kg by 15 min to injure the lungs, with the placental circulation intact (fetal) or after delivery (newborn). Fetal lambs were returned to the uterus for 2 h 45 min, whereas newborn lambs were maintained with gentle ventilatory support for the same period. The control group was not ventilated. Bronchoalveolar lavage fluid (BALF) and lung tissue were analyzed. In both fetal and newborn lambs, ventilation caused bronchial epithelial disruption in medium-sized airways. Early growth response protein 1 (Egr-1), monocyte chemotactic protein 1 (MCP-1), IL-6, and IL-1beta mRNA increased in the lung tissue from fetal and newborn lambs. Egr-1, MCP-1, and IL-6 mRNA were induced in mesenchymal cells surrounding small airways, whereas IL-1beta mRNA localized to the epithelium of medium/small airways. Ventilation caused loss of heat shock protein 70 (HSP70) mRNA from the bronchial epithelium, but induced mRNA in the smooth muscle surrounding large airways. HSP70 protein decreased in the lung tissue and increased in BALF with ventilation. Initiation of ventilation induced a stress response and inflammatory cytokines in small and medium-sized airways.