Complementary molecular and genetic approaches are yielding information about gain- versus loss-of-function phenotypes of specific genes and gene families in the embryonic, fetal, neonatal, and adult lungs. New insights are being derived from the conservation of function between genes regulating branching morphogenesis of the respiratory organs in Drosophila and in the mammalian lung. The function of specific morphogenetic genes in the lung are now placed in context with pattern-forming functions in other, better understood morphogenetic fields such as the limb bud. Initiation of lung morphogenesis from the floor of the primitive foregut requires coordinated transcriptional activation and repression involving hepatocyte nuclear factor-3β, Sonic hedgehog, patched, Gli2, and Gli3 as well as Nkx2.1. Subsequent inductive events require epithelial-mesenchymal interaction mediated by specific fibroblast growth factor ligand-receptor signaling as well as modulation by other peptide growth factors including epidermal growth factor, platelet-derived growth factor-A and transforming growth factor-β and by extracellular matrix components. A scientific rationale for developing new therapeutic approaches to urgent questions of human pulmonary health such as bronchopulmonary dysplasia is beginning to emerge from work in this field.