This study aimed to determine the effect of late-onset sepsis (LOS) on the development of bronchopulmonary dysplasia (BPD) in extremely low birth weight (ELBW) infants. A prospective cohort study was performed using data collected from 64 centres registered in the Korean national registry. LOS was defined as a positive blood culture and antibiotics treatment after 72 hours of life and prior to 36 weeks postmenstrual age (PMA). Data on the causative organisms were collected and analysed for respiratory outcomes. Among the 1,434 ELBW infants who survived to 36 weeks PMA, 481 (34%) developed LOS caused by bacteria (n = 405), fungi (n = 28), or both (n = 48). The incidence of BPD was significantly associated with LOS in both the entire cohort and the propensity score-matched cohort. Two or more LOS episodes were a risk factor for BPD. The impact of multiple episodes of LOS on BPD was prominent in infants who received mechanical ventilation for two weeks or less. The estimated odds ratios for BPD and severe BPD were greater with fungal LOS than with bacterial LOS. In conclusion, LOS, particularly complicated by multiple episodes and/or fungi, was a risk factor for BPD in ELBW infants.