Background and Aim: Bronchopulmonary dysplasia (BPD) leads to respiratory, cardiovascular, and neurodevelopmental problems. This study aimed to examine if azithromycin, as an anti-inflammatory agent, reduces the incidence of BPD in extremely preterm and very preterm neonates. Materials and Methods: This unblinded, randomized controlled trial was conducted on 114 preterm neonates with respiratory distress. Neonates who met the inclusion criteria were randomized into the intervention group and the control group. The intervention group received intravenous azithromycin at 10 mg/kg from < 24 hours after birth until 14 days, followed by 5 mg/kg for 7 days. The neonates were monitored for up to 36 weeks of postmenstrual age or until discharge from hospital to observe the outcomes. BPD was diagnosed based on the National Institute of Child Health and Human Development 2019 diagnostic criteria. Results: The incidence of BPD was higher in the control group compared with that in the intervention group (63% vs 38%) with a relative risk of 0.611 (0.417–0.896). Secondary outcomes such as the duration of mechanical ventilation and duration of achieving full enteral feeding were shorter in the intervention group. The incidence of necrotizing enterocolitis and the mortality rate were also lower in the intervention group. Conclusion: Azithromycin can reduce the incidence of BPD, accelerate the achievement of full enteral feeding, and reduce mortality in preterm neonates. © 2025, Himalaya Wellness Company. All rights reserved.