Hyperoxia exposure of immature lungs contributes to lung injury and airway hyperreactivity. Up to now, treatments of airway hyperreactivity induced by hyperoxia exposure have been ineffective. The aim of this study was to investigate the effects of quercetin on hyperoxia-induced airway hyperreactivity, impaired relaxation, and lung inflammation. Newborn rats were exposed to hyperoxia (FiO2 > 95%) or ambient air (AA) for seven days. Subgroups were injected with quercetin (10 mg·kg−1·day−1). After exposures, tracheal cylinders were prepared for in vitro wire myography. Contraction to methacholine was measured in the presence or absence of organ bath quercetin and/or Nω-nitro-L-arginine methyl ester (L-NAME). Relaxation responses were evoked in preconstricted tissues using electrical field stimulation (EFS). Lung tumor necrosis factor-alpha (TNF-α) and interleukin-1β (IL-1β) levels were measured by enzyme-linked immunosorbent assay (ELISA). A P < 0.05 was considered statistically significant. Contractile responses of tracheal smooth muscle (TSM) of hyperoxic animals were significantly increased compared with AA animals ( P < 0.001). Treatment with quercetin significantly reduced contraction in hyperoxic groups compared with hyperoxic control ( P < 0.01), but did not have any effect in AA groups. In hyperoxic animals, relaxation of TSM was significantly reduced compared with AA animals ( P < 0.001), while supplementation of quercetin restored the lost relaxation in hyperoxic groups. Incubation of preparations in L-NAME significantly reduced the quercetin effects on both contraction and relaxation ( P < 0.01). Treatment of hyperoxic animals with quercetin significantly decreased the expression of TNF-α and IL-1β compared with hyperoxic controls ( P < 0.001 and P < 0.01, respectively). The findings of this study demonstrate the protective effect of quercetin on airway hyperreactivity and suggest that quercetin might serve as a novel therapy to prevent and treat neonatal hyperoxia-induced airway hyperreactivity and inflammation.