Wnt signaling is essential to many events during organogenesis, including the development of the mammalian lung. The Wnt family member Wnt4 has been shown to be required for the development of kidney, gonads, thymus, mammary and pituitary glands. Here, we show that Wnt4 is critical for proper morphogenesis and growth of the respiratory system. Using in situ hybridization in mouse embryos, we identify a previously uncharacterized site of Wnt4 expression in the anterior trunk mesoderm. This expression domain initiates as early as E8.25 in the mesoderm abutting the tracheoesophageal endoderm, between the fusing dorsal aortae and the heart. Analysis of Wnt4(-/-) embryos reveals severe lung hypoplasia and tracheal abnormalities; however, aortic fusion and esophageal development are unaffected. We find decreased cell proliferation in Wnt4(-/-) lung buds, particularly in tip domains. In addition, we observe reduction of the important lung growth factors Fgf9, Fgf10, Sox9 and Wnt2 in the lung bud during early stages of organogenesis, as well as decreased tracheal expression of the progenitor factor Sox9. Together, these data reveal a previously unknown role for the secreted protein Wnt4 in respiratory system development.