Respiratory diseases of the newborn can arise from the disruption of essential angiogenic pathways. Neuropilin-1 (NRP1), which is a critical receptor implicated in systemic vascular growth and remodeling, binds two distinct ligand families: vascular endothelial growth factor (VEGF) and class 3 semaphorins (SEMA3). Although the function of VEGF-NRP1 interactions in vascular development is well described, the importance of SEMA3-NRP1 signaling in systemic or pulmonary vascular morphogenesis is debated. We sought to characterize the effect of deficient SEMA3-NRP1 signaling on fetal pulmonary vascular development in a mouse model. Temporospatial expression of Nrp1 and Sema3 mRNA and protein during murine fetal lung development was investigated, and the development of the pulmonary vasculature in transgenic mice deficient in Sema3-Nrp1 signaling was examined by histology, immunostaining, and electron microscopy. Loss of Sema3-Nrp1 signaling resulted in acute respiratory distress and high neonatal mortality. Pathohistological examination of mutants revealed immature and atelectatic regions in the lung, severely reduced capillary density, thickened alveolar septa containing centrally located dilated capillaries, hypertensive changes in arteriolar walls, anomalous and misaligned pulmonary veins, and reduced pulmonary surfactant secretion. Notably, many features are reminiscent of the fatal pulmonary disorder alveolar capillary dysplasia. These findings indicate a critical role for Sema3-Nrp1 signaling in fetal pulmonary development, which may have clinical relevance for treatment of various neonatal respiratory disorders, including alveolar capillary dysplasia.