Bronchopulmonary dysplasia (BPD) can evolve in prematurely born infants who require mechanical ventilation because of hyaline membrane disease (HMD). The development of BPD can be divided in an acute, a regenerative, a transitional, and a chronic phase. During these different phases, extensive remodeling of the lung parenchyma with re-epithelialization of the alveoli and formation of fibrosis occurs. Matrix metalloproteinase-1 (MMP-1) is an enzyme that is involved in re-epithelialization processes, and dysregulation of MMP-1 activity contributes to fibrosis. Localization of MMP-1 and its inhibitors, tissue inhibitor of metalloproteinase (TIMP)-1 and TIMP-2, were investigated in lung tissue obtained from infants who died during different phases of BPD development. In all studied cases (n = 50) type-II pneumocytes were found to be immunoreactive for MMP-1, TIMP-1, and TIMP-2. During the acute and regenerative phase of BPD, type-II pneumocytes re-epithelialize the injured alveoli. This may suggest that MMP-1 and its inhibitors, expressed by type-II pneumocytes, play a role in the reepithelialization process after acute lung injury. Although MMP-1 staining intensity remained constant in type-II pneumocytes during BPD development, TIMP-1 increased during the chronic fibrotic phase. This relative elevation of TIMP-1 compared with MMP-1 is indicative for reduced collagenolytic activity by type-II pneumocytes in chronic BPD and may contribute to fibrosis. Fibrotic foci in chronic BPD contained fibroblasts immunoreactive for MMP-1 and TIMP-1 and -2. This may indicate that decreased collagen turnover by fibroblasts contributes to fibrosis in BPD development.