Alveolar capillary dysplasia, a rare cause of neonatal pulmonary hypertension characterized by a developmental abnormality in the pulmonary vasculature, was diagnosed by lung biopsy in a male newborn maintained on nitric oxide therapy for 18 days. Autopsy confirmed the pulmonary vascular defect and demonstrated deficient airspace formation. In addition, a bronchial generation count was low, suggesting that the abnormal lung vascular development in this condition represents a special form of pulmonary hypoplasia that starts in early fetal life.