Abstract The pathogenesis of lung hypoplasia in congenital diaphragmatic hernia (CDH), a common birth defect, is poorly understood. The diaphragmatic defect can be repaired surgically, but the abnormal lung development contributes to a high mortality in these patients. To better understand the underlying pathobiology, we used the nitrofen rat model of CDH and characterized the proteome of hypoplastic CDH lungs at the alveolar stage (E21). Amongst the 218 significantly altered proteins between CDH and control lungs were Tenascin C, CREBBP, LYN and STAT3. We showed that Tenascin C was decreased around the distal airway branches in nitrofen and human fetal CDH lungs. In contrast, STAT3 was significantly increased in the airway epithelium of nitrofen lungs at E21. STAT3 inhibition after direct nitrofen exposure to fetal rat lung explants (E14.5) partially reversed the hypoplastic lung phenotype ex vivo by increasing peripheral lung budding. Moreover, we demonstrated that several STAT3 associated cytokines (IL-15, IL-9, IL-2) are increased in fetal tracheal aspirates of CDH survivors compared to non-survivors after fetoscopic tracheal occlusion. Using pathway analysis for significantly altered proteins in our proteomic analysis, we observed an enrichment in inflammatory response associated with Epstein Barr Virus and cytokine signaling in nitrofen CDH lungs. However, we were unable to detect EBV mRNA via in-situ Hybridization in human CDH lungs. With our unbiased proteomics approach, we show for the first time that inflammatory processes are likely underlying the pathogenesis of abnormal lung development in CDH.