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Abstract Congenital diaphragmatic hernia (CDH) causes severe pulmonary hypoplasia from herniation of abdominal contents into the thorax. Tracheal occlusion (TO) for human CDH improves survival, but morbidity and mortality remain high, and we do not fully understand the cellular pathways and processes most severely impacted by CDH and TO. We created a left diaphragmatic hernia (DH) in rabbit fetuses with subsequent TO and collected left lung sections for NextGen mRNA sequencing. DH, TO and DHTO fetuses had comparable body and organ growth to control except for lower lung weights in DH (p < 0.05). Of 13,687 expressed genes, DHTO had 687 differentially expressed genes compared with DH, but no other group-group comparison had more than 10. Considering genes in combination, many of the genes reduced in DH were more highly expressed in DHTO than in control. Benchmarking fetal rabbit lung gene expression to published lung development data, both DH and DHTO lungs were more highly correlated with the gene expression of immature lung. DNA synthesis was upregulated in DHTO compared with DH and ribosome and protein synthesis pathways were downregulated. DH reduced total and epithelial cell proliferation by half and two-thirds respectively, and DHTO increased proliferation by 2.5 and 3.4-fold respectively. Signaling pathways downregulated by DH and upregulated in DHTO were epidermal growth factor receptor signaling, ephrin signaling and cell migration; however, levels of ephrin and EGFR signaling in DHTO exceeded that of control. Identification and inhibition of the ligands responsible for this dysregulated signaling could improve lung development in CDH.