It has been known for decades that branching morphogenesis of the lung is mediated through reciprocal interactions between the epithelium and its underlying mesenchyme. In recent years, several key players, in particular members of the major signaling pathways that mediate this interaction, have been identified. Here, we review the genetic and molecular studies of these key components, which have provided a conceptual framework for understanding the interactions of these major signaling pathways in branching morphogenesis. The future challenge is to translate understanding of the signaling cascade into knowledge of the cellular responses, including cell proliferation, migration and differentiation, that lead to the stereotyped branching.*