November 17, 2006; doi:10.1152/ajplung.00221.2006.-Classical tissue recombination experiments have reported that at early gestation both tracheal and distal lung epithelium have the plasticity to respond to mesenchymal signals. Herein we examined the role of epithelialmesenchymal interactions in maintaining epithelial differentiation at late (E19 -E21, term ϭ 22 days) fetal gestation in the rat. Isolated distal lung epithelial cells were recombined with mesenchymal cells from lung, skin, and intestine, and the homotypic or heterotypic recombinant cell aggregates were cultured for up to 5 days. Recombining lung epithelial cells with mesenchyme from various sources induced a morphological pattern that was specific to the type of inducing mesenchyme. In situ analysis of surfactant protein (SP)-C, SP-B, and Clara cell secretory protein (CCSP) expression, as well as SP-C and CCSP promoter transactivation experiments, revealed that distal lung epithelium requires lung mesenchyme to maintain the alveolar, but not bronchiolar, phenotype. Incubation of lung recombinants with an anti-FGF7 antibody resulted in a partial inhibition of mesenchyme-induced SP-C promoter transactivation. Immunoreactivity for Delta and Lunatic fringe, components of the Notch pathway that regulates cell differentiation, was downregulated in the heterotypic recombinants. In contrast, Hes1 mRNA expression was increased in these recombinants. Cumulatively, these results suggest that at late fetal gestation, distal lung epithelial cells are not fully committed to a specific phenotype and still have the plasticity to respond to various signals. Their alveolar phenotype is likely maintained by Notch/Notch ligand interactions and mesenchymal factors, including FGF7.epithelial-mesenchymal interactions; cell differentiation; Notch signaling; fibroblast growth factors DURING LUNG MORPHOGENESIS numerous different cell phenotypes are formed along the anterior-posterior axis of the developing epithelial airways, each with different morphologies and patterns of gene expression. This anterior-posterior epithelial patterning of airways is characterized by distinct boundaries and is likely controlled by epithelialmesenchymal interactions (37). Classical tissue recombination experiments have shown that epithelial-mesenchymal interactions are required for branching of the lung epithelium in both avian and mammalian systems (27,34,44,48). When distal lung mesenchyme is grafted onto tracheal epithelium, branching occurs in a pattern that is remarkably similar to that seen in the developing lung (4). However, studies in which tracheal epithelium were cultured with grafted mesenchyme from intestine or skin demonstrated simple bud formation without significant branching (51). Furthermore, the grafting of tracheal mesenchyme to distal epithelium denuded of its own mesenchyme inhibits all distal epithelial branching (51). These studies clearly demonstrate a key difference in the instructive capabilities of embryonic lung and tracheal mesenchyme and suggest a specific re...