During the early development of the mouse lung a number of genes encoding signaling molecules are differentially expressed in the epithelium and mesenchyme of the distal buds. Evidence suggests they play a role in regulating the stereotypic processes of bud outgrowth and branching as well as proximal-distal patterning of both cell layers. To better understand the mechanisms underlying branching morphogenesis, a subtractive hybridization and differential screen was carried out for genes preferentially expressed in the epithelium at the tips of embryonic day 11.5 lung buds, versus more proximal regions. Twenty genes were identified, assigned to different categories based on sequence analysis, and their distal expression confirmed by whole-mount in situ hybridization.