Oxygen toxicity and antioxidant deficiencies contribute to the development of bronchopulmonary dysplasia. Aurothioglucose (ATG) and auranofin potently inhibit thioredoxin reductase-1 (TrxR1), and TrxR1 disruption activates nuclear factor E2-related factor 2 (Nrf2), a regulator of endogenous antioxidant responses. We have shown previously that ATG safely and effectively prevents lung injury in adult murine models, likely via Nrf2-dependent mechanisms. The current studies tested the hypothesis that ATG would attenuate hyperoxia-induced lung developmental deficits in newborn mice. Newborn C3H/HeN mice were treated with a single dose of ATG or saline within 12 hours of birth and were exposed to either room air or hyperoxia (85% O2). In hyperoxia, ATG potently inhibited TrxR1 activity in newborn murine lungs, attenuated decreases in body weight, increased the transcription of Nrf2-regulated genes nicotinamide adenine dinucleotide phosphate reduced quinone oxidoreductase-1 (NQO1) and heme oxygenase 1, and attenuated alterations in alveolar development. To determine the impact of TrxR1 inhibition on Nrf2 activation in vitro, murine alveolar epithelial-12 cells were treated with auranofin, which inhibited TrxR1 activity, enhanced Nrf2 nuclear levels, and increased NQO1 and heme oxygenase 1 transcription. Our novel data indicate that a single injection of the TrxR1 inhibitor ATG attenuates hyperoxia-induced alterations in alveolar development in newborn mice. Furthermore, our data support a model in which the effects of ATG treatment likely involve Nrf2 activation, which is consistent with our findings in other lung injury models. We conclude that TrxR1 represents a novel therapeutic target to prevent oxygen-mediated neonatal lung injury.