Recent advances in our understanding of neonatal pulmonary circulation and the underlying pathophysiology of hypoxemic respiratory failure (HRF)/persistent pulmonary hypertension of the newborn (PPHN) have resulted in more effective management strategies. Results from animal studies demonstrate that low alveolar oxygen tension (PAO2) causes hypoxic pulmonary vasoconstriction, whereas an increase in oxygen tension to normoxic levels (preductal arterial partial pressure of oxygen (PaO2) between 60 and 80 mm Hg and/or preductal peripheral capillary oxygen saturation between 90% and 97%) results in effective pulmonary vasodilation. Hyperoxia (preductal PaO2 >80 mm Hg) does not cause further pulmonary vasodilation, and oxygen toxicity may occur when high concentrations of inspired oxygen are used. It is therefore important to avoid both hypoxemia and hyperoxemia in the management of PPHN. In addition to oxygen supplementation, therapeutic strategies used to manage HRF/PPHN in term and late preterm neonates may include lung recruitment with optimal mean airway pressure and surfactant, inhaled and intravenous vasodilators and ‘inodilators’. Clinical evidence suggests that administration of surfactant or inhaled nitric oxide (iNO) therapy at a lower acuity of illness can decrease the risk of extracorporeal membrane oxygenation/death, progression of HRF and duration of hospital stay. Milrinone may be beneficial as an inodilator and may have specific benefits following prolonged exposure to iNO plus oxygen owing to inhibition of phosphodiesterase (PDE)-3A. Additionally, sildenafil, and, in selected cases, hydrocortisone may be appropriate options after hyperoxia and oxidative stress owing to their effects on PDE-5 activity and expression. Continued investigation into these and other interventions is needed to optimize treatment and improve outcomes.