The role of WNT signaling and its interactions with other morphogenetic pathways were investigated during lung development. Previously, we showed that targeted disruption of Wnt5a results in over-branching of the epithelium and thickening of the interstitium in embryonic lungs. In this study, we generated and characterized transgenic mice with lung-specific over-expression of Wnt5a from the SpC promoter. Over-expression of Wnt5a interfered with normal epithelial-mesenchymal interactions resulting in reduced epithelial branching and dilated distal airways. During early lung development, over-expression of Wnt5a in the epithelium resulted in increased Fgf10 in the mesenchyme and decreased Shh in the epithelium. Both levels and distribution of SHH receptor, Ptc were reduced in SpC-Wnt5a transgenic lungs and were reciprocally correlated to changes of Fgf10 in the mesenchyme, suggesting that SHH signaling is decreased by over-expression of Wnt5a. Cultured mesenchyme-free epithelial explants from SpC-Wnt5a transgenic lungs responded abnormally to recombinant FGF10 supplied uniformly in the Matrigel with dilated branch tips that mimic the in vivo phenotype. In contrast, chemotaxis of transgenic epithelial explants towards a directional FGF10 source was inhibited. These suggest that over-expression of Wnt5a disrupts epithelial-response to FGF10. In conclusion, Wnt5a regulates SHH and FGF10 signaling during lung development. © 2005 Elsevier Inc. All rights reserved.