Although increased neuropeptides are often detected in lungs that exhibit respiratory distress, whether they contribute to the condition is unknown. Here, we show in a mouse model of neuroendocrine cell hyperplasia of infancy, a pediatric disease with increased pulmonary neuroendocrine cells (PNECs), excess PNEC-derived neuropeptides are responsible for pulmonary manifestations including hypoxemia. In mouse postnatal lung, prolonged signaling from elevated neuropeptides such as calcitonin gene-related peptide (CGRP) activate receptors enriched on endothelial cells, leading to reduced cellular junction gene expression, increased endothelium permeability, excess lung fluid, and hypoxemia. Excess fluid and hypoxemia were effectively attenuated by either prevention of PNEC formation, inactivation of CGRP gene, endothelium-specific inactivation of CGRP receptor gene, or treatment with CGRP receptor antagonist. Neuropeptides were increased in human lung diseases with excess fluid such as acute respiratory distress syndrome. Our findings suggest that restricting neuropeptide function may limit fluid and improve gas exchange in these conditions.