MicroRNAs (miRs) are small conserved RNA that regulate gene expression. Bioinformatic analysis of miRNA profiles during mouse lung development indicated a role for multiple miRNA, including miRNA-489. miR-489 increased on completion of alveolar septation [postnatal day 42 (P42)], associated with decreases in its conserved target genes insulin-like growth factor-1 (Igf1) and tenascin C (Tnc). We hypothesized that dysregulation of miR-489 and its target genes Igf1 and Tnc contribute to hyperoxia-induced abnormal lung development. C57BL/6 mice were exposed to normoxia (21%) or hyperoxia (85% O2) from P4 to P14, in combination with intranasal locked nucleic acid against miR-489 to inhibit miR-489, cytomegalovirus promoter (pCMV)-miR-489 to overexpress miR-489, or empty vector. Hyperoxia reduced miR-489 and increased Igf1 and Tnc. Locked nucleic acid against miR-489 improved lung development during hyperoxia and did not alter it during normoxia, whereas miR-489 overexpression inhibited lung development during normoxia. The 3′ untranslated region in vitro reporter studies confirmed Igf1 and Tnc as targets of miR-489. While miR-489 was of epithelial origin and present in exosomes, its targets Igf1 and Tnc were produced by fibroblasts. Infants with bronchopulmonary dysplasia (BPD) had reduced lung miR-489 and increased Igf1 and Tnc compared with normal preterm or term infants. These results suggest increased miR-489 is an inhibitor of alveolar septation. During hyperoxia or BPD, reduced miR-489 and increased Igf1 and Tnc may be inadequate attempts at compensation. Further inhibition of miR-489 may permit alveolar septation to proceed. The use of specific miRNA antagonists or agonists may be a therapeutic strategy for inhibited alveolarization, such as in BPD.