Background <p>Bronchopulmonary dysplasia (BPD) is a prevalent cause of lung injury in premature infants. The migration inhibitory factor (MIF), its receptor CD74, and the TGFβ/Smad signaling cascade play pivotal roles in the regulation of alveolar epithelial type II cells (AECIIs) during lung development. This study investigated whether the MIF/CD74 axis regulates AECIIs by modulating the TGFβ/Smad pathway in BPD.</p> Materials and methods <p>A rat model of BPD induced by intraamniotic LPS-injection and postnatal hyperoxia exposure was treated with various interventions and histopathological changes using hematoxylin and eosin staining. In vitro, AECIIs with CD74 or SMAD4 knockdown or overexpression were treated with LPS. Cell proliferation was assessed using BrdU and MTT assays, mRNA expression levels via RT-qPCR, while protein expression was analyzed using immunofluorescence, western blotting, and ELISA.</p> Results <p>Our findings revealed that LPS inhibited AECII proliferation, induced transdifferentiation, apoptosis, autophagy, and upregulated MIF, CD74, TGFβ, and phosphorylated Smad proteins both in vitro and in vivo. MIF supplementation and CD74/SMAD4 overexpression reversed LPS-induced effects by promoting proliferation and reducing transdifferentiation, apoptosis, and autophagy in AECIIs. Conversely, MIF inhibition or CD74/SMAD4 knockdown exacerbated these effects. In vivo, MIF and TGFβ1 counteracted the effects of LPS, whereas LL1 enhanced LPS-induced damage. The TGFβ/Smad pathway mediated the regulatory effects of the MIF/CD74 axis in AECIIs within the BPD context.</p> Conclusion <p>The MIF/CD74 axis regulates AECII phenotypes in BPD via the TGFβ1/Smad4 pathway, underscoring the potential for targeted therapies against the MIF/CD74 axis and TGFβ/Smad signaling for the prevention and treatment of BPD.</p> Trial registration <p>Not applicable.</p>