Lung morphogenesis relies on diverse cell intrinsic and extrinsic mechanisms to ensure proper cellular differentiation and compartmentalization. Using genetic mouse models, tissue explants, and transcriptomic analysis, we demonstrate that the epigenetic reader Bromodomain Containing Protein 4 (BRD4) is required for lung morphogenesis and perinatal survival. Endodermal BRD4 deletion impairs epithelial-mesenchymal crosstalk, leading to disrupted proximal-distal patterning and branching morphogenesis. These early defects result in dilated airways and the formation of cystic distal airway structures, containing both airway and alveolar features. Moreover, BRD4 deficient lungs exhibit abnormal airway and alveolar epithelial cell lineage allocation and differentiation. Restoration of SHH signaling partially rescues defects due to loss of BRD4, suggesting a role for BRD4 in regulating the SHH-FGF signaling axis. Together, these data identify the essential role of Brd4 in lung development to ensure proper intercellular crosstalk to enable proper lineage specification, identity, and maturation.