Despite tremendous advances in intensive care in general and respiratory care in particular, chronic lung disease (CLD) still remains a major cause of morbidity and mortality both in the premature infant and adult. This is primarily due to a lack of understanding of the molecular mechanisms involved in both normal and abnormal lung development. Based on the cellular/molecular mechanisms involved in physiologic lung development, we have taken a basic biologic approach to elucidate the pathophysiology of CLD. Stretch regulated parathyroid hormone-related protein (PTHrP) signaling between the alveolar type II (ATII) cell and the mesoderm coordinately upregulates the key genes for the homeostatic fibroblast phenotype, which in turn stimulates surfactant synthesis by ATII cells. Under the influence of conditions that predispose to CLD, normal PTHrP signaling is disrupted and interstitial fibroblasts transdifferentiate to myofibroblasts, the hallmark cell of CLD. We have exploited the understanding of these molecular processes to demonstrate the proof-of-principle that by stabilizing the alveolar PTHrP signaling pathway using exogenously administered agonists of peroxisome proliferator-activated receptor-gamma a key target of PTHrP signaling, we can prevent and/or rescue the molecular injuries caused by insults that lead to CLD. Based upon extensive work from our laboratory, we suggest a novel and innovative molecular approach to prevent and/or treat fibrotic conditions in general and CLD in particular. However, to avoid any subsequent unexpected adverse consequences, it is important to emphasize that before translating the suggested approach into human trials, further testing and refinement in animal models is needed.