The lung is both the conduit for oxygen uptake and is also affected by hypoxia and hypoxia signaling. Decreased ventilatory drive, airway obstructive processes, intra-alveolar exudates, septal thickening by edema, inflammation, fibrosis, or damage to alveolar capillaries will all interpose a significant and potentially life-threatening barrier to proper oxygenation, therefore enhancing the alveolar/arterial pO2 gradient. These processes result in decreased blood and tissue oxygenation. This review addresses the relationship of hypoxia with lung development and with lung diseases. We particularly focus on molecular mechanisms underlying hypoxia-driven physiological and pathophysiological lung processes, specifically in the infant lung, pulmonary hypertension, and chronic obstructive pulmonary disease.