Myeloperoxidase (MPO), oxidative stress (OS), and endoplasmic reticulum (ER) stress are increased in the lungs of rat pups raised in hyperoxia, an established model of bronchopulmonary dysplasia (BPD). However, the relationship between OS, MPO, and ER stress has not been examined in hyperoxia rat pups. We treated Sprague-Dawley rat pups with tunicamycin or hyperoxia to determine this relationship. ER stress was detected using immunofluorescence, transcriptomic, proteomic, and electron microscopic analyses. Immunofluorescence observed increased ER stress in the lungs of hyperoxic rat BPD and human BPD. Proteomic and morphometric studies showed that tunicamycin directly increased ER stress of rat lungs and decreased lung complexity with a BPD phenotype. Previously, we showed that hyperoxia initiates a cycle of destruction that we hypothesized starts from increasing OS through MPO accumulation and then increases ER stress to cause BPD. To inhibit ER stress, we used tauroursodeoxycholic acid (TUDCA), a molecular chaperone. To break the cycle of destruction and reduce OS and MPO, we used N-acetyl-lysyltyrosylcysteine amide (KYC). The fact that TUDCA improved lung complexity in tunicamycin- and hyperoxia-treated rat pups supports the idea that ER stress plays a causal role in BPD. Additional support comes from data showing TUDCA decreased lung myeloid cells and MPO levels in the lungs of tunicamycin- and hyperoxia-treated rat pups. These data link OS and MPO to ER stress in the mechanisms mediating BPD. KYC's inhibition of ER stress in the tunicamycin-treated rat pup's lung provides additional support for the idea that MPO-induced ER stress plays a causal role in the BPD phenotype. ER stress appears to expand our proposed cycle of destruction. Our results suggest ER stress evolves from OS and MPO to increase neonatal lung injury and impair growth and development. The encouraging effect of TUDCA indicates that this compound has the potential for treating BPD.