Bone marrow-derived mesenchymal stem cells (BMSCs) have been shown recently to ameliorate hyperoxia-induced lung injury, but the underlying mechanism remains unclear. This study aimed to determine whether BMSCs attenuate hyperoxia-induced lung injury by down-modulating the inflammatory RAGE/NF-κB (receptor for advanced glycation end-products/nuclear factor-κB) signaling. Thirty Sprague-Dawley newborn rats were randomly divided into three groups (n = 10): sham control (C); hyperoxia-induced acute lung injury (ALI) (B) and ALI with BMSCs transplantation (A). Rats were sacrificed at three-day post-transplantation. RAGE and NF-κB expression in lung tissue was detected by reverse transcription polymerase chain reaction, Western blot and immunohistochemistry analysis. The levels of tumor necrosis factor α (TNF-α) and RAGE in bronchoalveolar lavage fluid (BALF) and in serum were detected by enzyme-linked immunosorbent assay. The lung damage was evaluated by histological examination. The results showed that RAGE and TNF-α concentrations in BALF were significantly lower in Group A than in Group B. Moreover, RAGE and NF-κB expression in lung tissue at mRNA and protein concentrations was significantly lower in Group A than in Group B. The lung damage score was significantly lower in Group A than in Group B. These data demonstrate that hyperoxia induces the inflammation and causes damage in the lung but BMSC transplantation could alleviate hyperoxia-induced lung injury by inhibiting the inflammatory process mediated by RAGE/NF-κB signaling.