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Lung side population (SP) cells are resident lung precursor cells with both epithelial and mesenchymal potential that are believed to play a role in normal lung development and repair. Neonatal hyperoxic exposure impairs lung development leading to a long-term decrease in gas exchange surfaces. The hypothesis that lung SP cells are altered during impaired lung development has not been studied. To address this issue, we characterized the endothelial potential of neonatal lung SP and subsets of lung SP from neonatal mice following hyperoxic exposure during room air recovery. Lung SP cells were isolated and sorted on the basis of their capacity to efflux Hoechst 33342. The lung SP was further sorted based on expression of Flk-1 and CD45. In vitro, both CD45(pos)/Flk-1(pos) and CD45(neg)/Flk-1(pos) bind isolectin B4 and incorporate LDL and form networks in matrigel, indicating that these populations have endothelial cell characteristics. Hyperoxic exposure of neonatal mice resulted in subtle changes in vascular and alveolar density on P13, which persisted with room air recovery to P41. During room air recovery, a decrease in lung SP cells was detected in the hyperoxic-exposed group on postnatal day 13 followed by an increase on day 41. Within this group, the lung SP subpopulation of cells expressing CD45 increased on day 21, 41, and 55. Here, we show that lung SP cells demonstrate endothelial potential and that the population distribution changes in number as well as composition following hyperoxic exposure. The hyperoxia-induced changes in lung SP cells may limit their ability to effectively contribute to tissue morphogenesis during room air recovery.