Reactive airway diseases are significant sources of pulmonary morbidity in neonatal and pediatric patients. Supplemental oxygen exposure in premature infants contributes to airway diseases such as asthma and promotes development of airway remodeling, characterized by increased airway smooth muscle (ASM) mass and extracellular matrix (ECM) deposition. Decreased plasma membrane caveolin-1 (CAV1) expression has been implicated in airway disease and may contribute to airway remodeling and hyperreactivity. Here, we investigated the impact of clinically relevant moderate hyperoxia (50% O₂) on airway remodeling and caveolar protein expression in a neonatal mouse model. Within 12 h of birth, litters of B6129SF2J mice were randomized to room air (RA) or 50% hyperoxia exposure for 7 days with or without caveolin-1 scaffolding domain peptide (CSD; caveolin-1 mimic; 10 µl, 0.25 mM daily via intraperitoneal injection) followed by 14 days of recovery in normoxia. Moderate hyperoxia significantly increased airway reactivity and decreased pulmonary compliance at 3 wk. Histologic assessment demonstrated airway wall thickening and increased ASM mass following hyperoxia. RNA from isolated ASM demonstrated significant decreases in CAV1 and cavin-1 in hyperoxia-exposed animals while cavin-3 was increased. Supplementation with intraperitoneal CSD mitigated both the physiologic and histologic changes observed with hyperoxia. Overall, these data show that moderate hyperoxia is detrimental to developing airway and may predispose to airway reactivity and remodeling. Loss of CAV1 is one mechanism through which hyperoxia produces these deleterious effects. Supplementation of CAV1 using CSD or similar analogs may represent a new therapeutic avenue for blunting hyperoxia-induced pulmonary damage in neonates.