Bronchopulmonary dysplasia is a leading cause of mortality and morbidity in preterm infants despite improved treatment modalities. Pentoxifylline, a phosphodiesterase inhibitor, inhibits multiple processes that lead to neonatal hyperoxic lung injury, including inflammation, coagulation, and edema. Using a preterm rat model, we investigated the effects of pentoxifylline on hyperoxia-induced lung injury and survival. Preterm rat pups were exposed to 100% oxygen and injected subcutaneously with 0.9% saline or 75 mg/kg pentoxifylline twice a day. On day 10, lung tissue was harvested for histology, fibrin deposition, and mRNA expression, and bronchoalveolar lavage fluid was collected for total protein concentration. Pentoxifylline treatment increased mean survival by 3 days ( P = 0.0018) and reduced fibrin deposition by 66% ( P < 0.001) in lung homogenates compared with untreated hyperoxia-exposed controls. Monocyte chemoattractant protein-1 expression in lung homogenates was decreased, but the expressions of TNF-α, IL-6, matrix metalloproteinase-12, tissue factor, and plasminogen activator inhibitor-1 were similar in both groups. Total protein concentration in bronchoalveolar lavage fluid was decreased by 33% ( P = 0.029) in the pentoxifylline group. Pentoxifylline treatment attenuates alveolar fibrin deposition and prolongs survival in preterm rat pups with neonatal hyperoxic lung injury, probably by reducing capillary-alveolar protein leakage.