Abstract In preterm infants, exposure to inflammation increases the risk of bronchopulmonary dysplasia, a chronic, developmental lung disease. Although macrophages are the key cells that initiate lung inflammation, less is known about lung macrophage phenotype and maturation. We hypothesized that fetal lung macrophages mature into distinct subpopulations during mouse development, and that activation could influence macrophage maturation. Expression of the fetal macrophage markers CD68, CD86, CD206, Ym1, fibrinogen-like protein 2, and indolamine-2, 3-dioxygenase was developmentally regulated, with each marker having different temporal patterns. Flow cytometry analysis showed macrophages within the fetal lung were less diverse than the distinctly separate subpopulations in newborn and adult lungs. Similar to adult alveolar macrophages, fetal lung macrophages responded to the TLR4 agonist LPS and the alternative activation cytokines IL-4 and IL-13. Using a macrophage-specific constitutively active IκB Kinase transgenic model (IKFM), we demonstrated that macrophage activation increased proinflammatory gene expression and reduced the response of fetal lung macrophages to IL-4 and IL-13. Activation also increased fetal lung macrophage proliferation. Fetal IKFM lungs contained increased percentages of more mature, CD11blowF4/80high cells that also expressed higher levels of the alternative activation markers CD204 and CD206. Development of fetal lung macrophages into mature alveolar macrophages may therefore include features of both proinflammatory and alternative activation paradigms.