Increasing positive end-expiratory pressure (PEEP) is advocated to recruit alveoli during high-frequency jet ventilation (HFJV), but its effect on cardiopulmonary physiology and lung injury is poorly documented. We hypothesized that high PEEP would recruit alveoli and reduce lung injury but compromise pulmonary blood flow (PBF). Preterm lambs of anesthetized ewes were instrumented, intubated, and delivered by cesarean section after instillation of surfactant. HFJV was commenced with a PEEP of 5 cm H2O. Lambs were allocated randomly at delivery to remain on constant PEEP (PEEPconst, n = 6) or to recruitment via stepwise adjustments in PEEP (PEEPadj, n = 6) to 12 cm H2O then back to 8 cm H2O over the initial 60 min. PBF was measured continuously while ventilatory parameters and arterial blood gases were measured at intervals. At postmortem, in situ pressure-volume deflation curves were recorded, and bronchoalveolar lavage fluid and lung tissue were obtained to assess inflammation. PEEPadj lambs had lower pressure amplitude, fractional inspired oxygen concentration, oxygenation index, and PBF and more compliant lungs. Inflammatory markers were lower in the PEEPadj group. Adjusted PEEP during HFJV improves oxygenation and lung compliance and reduces ventilator requirements despite reducing pulmonary perfusion.