Mitochondrial DNA (mtDNA) released from dead or injured cells can activate inflammation, and mesenchymal stem cell (MSC) transplantation can reduce inflammation and injury. However, it has not been tested whether the release of mtDNA can be reduced by MSC transplantation. We hypothesized that the level of extracellular mtDNA would be increased after hyperoxia-induced lung injury but reduced after lung injury attenuation by MSC therapy in our newborn rat model. In an in vitro study using a rat lung epithelial L2 cell line, we found that the level of extracellular mtDNA was significantly increased with HO-induced cell death but reduced after MSC co-incubation. In an in vivo study, we confirmed that the levels of cell death, extracellular mtDNA, and inflammatory cytokines were significantly increased in hyperoxic newborn rat lungs but reduced after MSC transplantation. The levels of extracellular mtDNA were significantly and positively correlated with the levels of the inflammatory cytokines. The TLR9/MyD88/NF-κB pathway, which is activated by binding to mtDNA, was also significantly upregulated but downregulated after MSC transplantation. We found a significant positive correlation between inflammatory cytokines and extracellular mtDNA in intubated neonates. The levels of inflammatory cytokines and extracellular mtDNA changed over time in a similar pattern in transtracheal aspirate samples from intubated neonates. In conclusion, increased levels of extracellular mtDNA are associated with increased inflammation in hyperoxia-induced lung injury, and attenuation of lung inflammation by MSC therapy is associated with reduced levels of extracellular mtDNA.