Branching morphogenesis couples cellular differentiation with development of tissue architecture. Intrahepatic bile duct (IHBD) morphogenesis is initiated with biliary epithelial cell (BEC) specification and eventually forms a heterogeneous network of large ducts and small ductules. Here, we show that Sox9 is required for developmental establishment of small ductules. IHBDs emerge as a webbed structure by E15.5 and undergo morphological maturation through 2 weeks of age. Developmental knockout of Sox9 leads to decreased postnatal branching morphogenesis, manifesting as loss of ductules in adult livers. In the absence of Sox9, BECs fail to mature and exhibit elevated TGF-β signaling and Activin A. Activin A induces developmental gene expression and morphological defects in BEC organoids and represses ductule formation in postnatal livers. Our data demonstrate that adult IHBD morphology and BEC maturation is regulated by the Sox9-dependent formation of precursors to ductules during development, mediated in part by downregulation of Activin A.