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Preterm birth (<37 weeks) is the world’s principal cause of death of children <5 years of age. Bronchopulmonary dysplasia (BPD) is the most common complication of preterm birth. BPD is characterized by an arrest in alveolar and vascular development within the lung. It is a multifactorial disease, caused by a combination of supplemental oxygen, mechanical ventilation, and inflammation. BPD is also an independent risk factor for abnormal neurodevelopment. The link between BPD and abnormal neurodevelopment is poorly understood and there are currently no effective cures for these complications. We hypothesized that a crucial cell population for brain development, i.e., the neural progenitor cell (NPC) is functionally impaired in BPD and that this impairment is associated with abnormal neurodevelopment. Based on our previous findings, we also predicted that human umbilical cord-mesenchymal stromal cell (UC-MSC) extracellular vesicles (EVs), could mitigate both the lung and brain injuries in experimental BPD. We utilized several animal models of BPD, across multiple species, to determine the effects of hyperoxia, mechanical ventilation, and inflammation on the developing lungs and brain. We also utilized UC- MSC therapy to mitigate these injuries. We discovered that hyperoxia exposure damages the developing lungs as well as the brain, leading to cerebrovascular and NPC impairments, as well as reduced neurogenesis. These impairments were associated with neurobehavioural deficits in adulthood. Furthermore, we found that inflammation in combination with mechanical ventilation and hyperoxia also impairs NPC function. Importantly, we demonstrated that UC-MSC EVs can reduce inflammation, improve vascular growth, restore lung growth, and mitigate impairments in NPC self-renewal. This work highlights novel mechanisms of BPD-associated abnormal neurodevelopment and offers potential regenerative medicine therapies to alleviate these outcomes for this vulnerable population.