Exaggeration of type 2 immune responses promotes lung inflammation and altered lung development; however, eosinophils, despite expansion in the postnatal lung, have not been specifically assessed in the context of neonatal lung disease. Furthermore, early life factors including prematurity and respiratory infection predispose infants to chronic obstructive pulmonary disease later in life. To assess eosinophils in the developing lung and how they may contribute to chronic lung disease, we generated mice harboring eosinophil-specific deletion of the negative regulatory enzyme SH2 domain-containing inositol 5′ phosphatase-1. This increased the activity and number of pulmonary eosinophils in the developing lung, which was associated with impaired lung development, expansion of activated alveolar macrophages (AMφ), multinucleated giant cell formation, enlargement of airspaces, and fibrosis. Despite regression of eosinophils following completion of lung development, AMφ-dominated inflammation persisted, alongside lung damage. Bone marrow chimera studies showed that SH2 domain-containing inositol 5′ phosphatase-1-deficient eosinophils were not sufficient to drive inflammatory lung disease in adult steady-state mice but once inflammation and damage were present, it could not be resolved. Depletion of eosinophils during alveolarization alleviated pulmonary inflammation and lung pathology, demonstrating an eosinophil-intrinsic effect. These results show that the presence of activated eosinophils during alveolarization aggravates AMφs and promotes sustained inflammation and long-lasting lung pathology.