Neonatal pulmonary vascular disease (PVD) is increasingly recognized as a disease that complicates the cardiopulmonary adaptations after birth and predisposes to long‐term cardiopulmonary disease. There is growing evidence that PVD is associated with disruptions in the nitric oxide (NO)‐cGMP‐phosphodiesterase 5 (PDE5) pathway. Examination of the functionality of different parts of this pathway is required for better understanding of the pathogenesis of neonatal PVD. For this purpose, the role of the NO‐cGMP‐PDE5 pathway in regulation of pulmonary vascular function was investigated in vivo, both at rest and during exercise, and in isolated pulmonary small arteries in vitro, in a neonatal swine model with hypoxia‐induced PVD. Endothelium‐dependent vasodilatation was impaired in piglets with hypoxia‐induced PVD both in vivo at rest and in vitro. Moreover, the responsiveness to the NO‐donor SNP was reduced in hypoxia‐exposed piglets in vivo, while the relaxation to SNP and 8‐bromo‐cyclicGMP in vitro were unaltered. Finally, PDE5 inhibition‐induced pulmonary vasodilatation was impaired in hypoxia‐exposed piglets both in vitro and in vivo at rest. During exercise, however, the pulmonary vasodilator effect of PDE5 inhibition was significantly larger in hypoxia‐exposed as compared to normoxia‐exposed piglets. In conclusion, the impaired endothelium‐dependent vasodilatation in piglets with hypoxia‐induced PVD was accompanied by reduced responsiveness to NO, potentially caused by altered sensitivity and/or activity of soluble guanylyl cyclase (sGC), resulting in an impaired cGMP production. Our findings in a newborn animal model for neonatal PVD suggests that sGC stimulators/activators may be a novel treatment strategy to alleviate neonatal PVD.