Background: Acute kidney injury (AKI) impairs electrolyte balance, alters fluid homeostasis and decreases toxin excretion. More recent data suggest it also affects the physiology of distant organs. Methods: We performed a prospective cohort study which invloved 122 premature infants [birth weight (BW) ≤1200 g and/or gestational age (GA) <31 weeks] to determine relationships between AKI and bronchopulmonary dysplasia (BPD)/mortality. Days until oxygen discontinuation was compared between those with and without AKI in survivors who received oxygen for ≥24 h. Results: Acute kidney disease, defined by a rise in serum creatinine (SCr) of ≥0.3 mg/dl or an increase in SCr of ≥150 %, occurred in 36/122 (30 %) of the premature infants. Those with AKI had a 70 % higher risk of oxygen requirement or of dying at 28 days of life [relative risk (RR) 1.71, 95 % confidence interval (CI) 1.22–2.39; p < 0.002]. This association remained after controlling for GA, pre-eclampsia, 5 min Apgar score and percentage maximum weight change (max % weight Δ) in the first 4 days (RR 1.45, 95 % CI 1.07–1.97); p < 0.02). Similar findings were noted for receipt of mechanical ventilation/death by day 28 (adjusted RR 1.53, 95 % CI 1.05–2.22; p < 0.03). Those without AKI were 2.5-fold more likely to come off oxygen [hazard ratio (HR) 1.3–5; p < 0.02) than those with AKI, even when controlling for GA, pre-eclampsia, 5 min Apgar and max % weight Δ (multivariate HR 2.0, 95 % CI 0.9–4.0; p < 0.06). Conclusions: In premature infants, AKI is associated with BPD/mortality. As AKI could lead to altered lung physiology, interventions to ameliorate AKI could improve long-term BPD.