Bronchopulmonary dysplasia (BPD) is characterized by alveolar simplification with decreased alveolar number and increased airspace size. Formation of alveoli involves a process known as secondary septation triggered by myofibroblasts. This study investigated the underlying mechanisms of altered lung morphogenesis in a rat model of BPD induced by intra-amniotic injection of lipopolysaccharide (LPS). Results showed that LPS disrupted alveolar morphology and led to abnormal localization of myofibroblasts in the lung of newborn rats, mostly in primary septa with few in secondary septa. To identify potential mechanisms, in vitro experiments were carried out to observe the migration behavior of myofibroblasts. The migration speed of lung myofibroblasts increased with LPS treatment, whereas the directional persistence decreased. We found that LPS induced activation of EGFR and overexpression of its ligand, TGF-α in myofibroblasts. AG1478, an EGFR inhibitor, abrogated the enhanced locomotivity of myofibroblasts by LPS and also increased the directional persistence of myofibroblast migration. Myofibroblasts showed a high asymmetry of phospho-EGFR localization, which was absent after LPS treatment. Application of rhTGF-α to myofibroblasts decreased the directional persistence. Our findings indicated that asymmetry of phospho-EGFR localization in myofibroblasts was important for cell migration and its directional persistence. We speculate that LPS exposure disrupts the asymmetric localization of phospho-EGFR, leading to decreased stability of cell polarity and final abnormal location of myofibroblasts in vivo, which is critical to secondary septation and may contribute to the arrested alveolar development in BPD.