Human cytomegalovirus (HCMV) is the leading viral cause of birth defects and life-threatening lung-associated diseases in premature infants and immunocompromised children. Although the fetal lung is a major target organ of the virus, HCMV lung pathogenesis has remained unexplored, possibly as a result of extreme host range restriction. To overcome this hurdle, we generated a SCID-hu lung mouse model that closely recapitulates the discrete stages of human lung development in utero. Human fetal lung tissue was implanted into severe combined immunodeficient (CB17-scid) mice and inoculated by direct injection with the VR1814 clinical isolate of HCMV. Virus replication in the fetal lung was assessed by the quantification of infectious virus titers and HCMV genome copies and the detection of HCMV proteins by immunohistochemistry and Western blotting. We show that HCMV efficiently replicated in the lung implants during a 2-week period, forming large viral lesions. The virus productively infected alveolar epithelial and mesenchymal cells, imitating congenital infection of the fetal lung. HCMV replication triggered apoptosis near and within the viral lesions and impaired the production of surfactant proteins in the alveolar epithelium. Our findings highlight that congenital and neonatal HCMV infection can adversely impact lung development, leading to pneumonia and acute lung injury. We have successfully developed a small-animal model that closely recapitulates fetal and neonatal lung development and provides a valuable, biologically relevant tool for an understanding of the lung pathogenesis of HCMV as well as other human respiratory viruses. Additionally, this model would greatly facilitate the development and testing of new antiviral therapies for HCMV along with select human pulmonary pathogens.