Type 3 innate lymphoid cells (ILC3s) are critical for lung defense against bacterial pneumonia in the neonatal period, but the signals that guide pulmonary ILC3 development remain unclear. Here, we demonstrated that pulmonary ILC3s descended from ILC precursors that populated a niche defined by fibroblasts in the developing lung. Alveolar fibroblasts produced insulin-like growth factor 1 (IGF1), which instructed expansion and maturation of pulmonary ILC precursors. Conditional ablation of IGF1 in alveolar fibroblasts or deletion of the IGF-1 receptor from ILC precursors interrupted ILC3 biogenesis and rendered newborn mice susceptible to pneumonia. Premature infants with bronchopulmonary dysplasia, characterized by interrupted postnatal alveolar development and increased morbidity to respiratory infections, had reduced IGF1 concentrations and pulmonary ILC3 numbers. These findings indicate that the newborn period is a critical window in pulmonary immunity development, and disrupted lung development in prematurely born infants may have enduring effects on host resistance to respiratory infections.