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Mesenchymal stromal cells (MSCs) are released into the airways of preterm infants following lung injury. These cells display a proinflammatory phenotype and are associated with development of severe bronchopulmonary dysplasia (BPD). We aimed to characterize the functional properties of MSCs obtained from tracheal aspirates of 50 preterm infants who required invasive ventilation. Samples were separated by disease severity. The increased proliferative capacity of MSCs was associated with longer duration of mechanical ventilation and higher severity of BPD. Augmented growth depended on nuclear accumulation of NFκBp65 and was accompanied by reduced expression of cytosolic α-smooth muscle actin (α-SMA). The central role of NF-κB signaling was confirmed by inhibition of IκBα phosphorylation. The combined score of proliferative capacity, accumulation of NFκBp65, and expression of α-SMA was used to predict the development of severe BPD with an area under the curve (AUC) of 0.847. We mimicked the clinical situation in vitro, and stimulated MSCs with IL-1β and TNF-α. Both cytokines induced similar and persistent changes as was observed in MSCs obtained from preterm infants with severe BPD. RNA interference was employed to investigate the mechanistic link between NFκBp65 accumulation and alterations in phenotype. Our data indicate that determining the phenotype of resident pulmonary MSCs represents a promising biomarker-based approach. The persistent alterations in phenotype, observed in MSCs from preterm infants with severe BPD, were induced by the pulmonary inflammatory response. NFκBp65 accumulation was identified as a central regulatory mechanism. Future preclinical and clinical studies, aimed to prevent BPD, should focus on phenotype changes in pulmonary MSCs.