Chronic lung disease in neonates results from both lung injury and inadequate repair processes. Little is known about the growth factors involved in lung injury and repair, but vascular endothelial growth factor (VEGF) has recently been reported in several animal models of lung injury. VEGF is an endothelial cell-specific mitogen, which is also known as vascular permeability factor because of its ability to induce vascular leak in some tissues. Chronic lung disease is complicated by increased vascular permeability, which can be improved by avoidance of hypoxia and in some cases by dexamethasone therapy. In many cells, hypoxia stimulates VEGF expression. Also, in some cases, dexamethasone blocks VEGF expression. This study examined the role of hypoxia and dexamethasone in regulating the expression of VEGF in pulmonary artery smooth muscle cells. An ovine VEGF cDNA fragment (453 bp) was cloned and found to be highly homologous to known human sequences for VEGF165. Sheep pulmonary artery smooth muscle cells were cultured and exposed to room air, hypoxia, and dexamethasone, alone or in combination for 6 h. At baseline these cells expressed VEGF mRNA at approximately 3.9 kb. The half-life of VEGF mRNA in the smooth muscle cells was 171 min, more than 3-fold longer than previous reports for epithelial cells. Exposure to hypoxia caused a 3-fold increase in mRNA abundance, primarily through transcriptional up-regulation. Dexamethasone blocked the hypoxia-induced increase in VEGF mRNA. The results demonstrate that hypoxia and dexamethasone are regulators of VEGF expression in ovine pulmonary artery smooth muscle cells. It is not known whether VEGF derived from these cells is involved in lung injury and/or normal homeostatsis.