Our understanding of lung development in the past two decades has moved from an anatomical to a histological basis and, most recently, to a molecular basis. Tissue interactions specify tracheal and lung primordia formation, program branching morphogenesis of the airway epithelium and regulate epithelial differentiation. In addition, lung development is influenced by mechanical and humoral factors. The regulatory molecules involved in morphogenetic signaling include growth and transcription factors and extracellular matrix molecules. These morphogenetic signals are responsible for lung patterning and differentiation. We will provide a brief overview of molecular signaling during early respiratory formation, airway branching, pulmonary vascularization and epithelial differentiation. We will then review aberrant morphogenetic signaling in human lung abnormalities, such as tracheoesophageal fistula, congenital diaphragmatic hernia, pulmonary hyperplasia, alveolar capillary dysplasia, congenital cystic adenomatoid malformation and bronchopulmonary dysplasia.