Little is known about how retinoic acid (RA) synthesis, utilization and met
abolism are regulated in the embryonic lung and how these activities relate
to lung pattern formation. Here we report that early lung bud formation an
d subsequent branching morphogenesis are characterized by distinct stages o
f RA signaling. At the onset of lung development RA signaling is ubiquitous
ly activated in primary buds, as shown by expression of the major RA-synthe
sizing enzyme, RALDH-2 and activation of a RARE-lacZ transgene. Nevertheles
s, further airway branching appears to require downregulation of RA pathway
s by decreased synthesis, increased KA degradation in the epithelium via P4
50RAI-mediated metabolism, and inhibition of RA signaling in the mesenchyme
by COUPTF-II expression. These mechanisms controlling local RA signaling m
ay be critical for normal branching, since we show that manipulating RA lev
els in vitro to maintain RA signaling activated as in the initial stage, le
ads to an immature lung phenotype characterized by failure to form typical
distal buds. We show that this phenotype likely results from RA interfering
with the establishment of a distal signaling center, altering levels and d
istribution of Fgf10 and Bmp4, genes that are essential for distal lung for
mation. Furthermore, RA upregulates P450RAI expression, suggesting the pres
ence of feedback mechanisms controlling RA availability. Our study illustra
tes the importance of regional mechanisms that control RA availability and
utilization for correct expression of pattern regulators and normal morphog
enesis during lung development.