Brief exposure of rats to high-dose estrogen during the neonatal period interrupts prostate development in a lobe-specific manner and predisposes the gland to dysplasia with aging, a phenomenon referred to as developmental estrogenization. Our previous studies have revealed that these effects are initiated through altered steroid receptor expression; however, the immediate downstream targets remain unclear. We have recently shown that developmental expression of Shh-ptc-gli is downregulated in the dorsolateral prostate following estrogenization, and this is responsible, in part, for branching deficits observed in that prostatic region specifically. In the present study, we examine the role of Fgf10 signaling during rat prostate development and as a mediator of the developmental estrogenized phenotype. Fgf10 and FgfR2iiib localize to the distal signaling center of elongating and branching ducts in separate prostate lobes where they regulate the expression of multiple morphoregulatory genes including Shh, ptc, Bmp7, Bmp4, Hoxb13, and Nkx3.1. Ventral and lateral lobe organ cultures and mesenchyme-free ductal cultures demonstrate a direct role for Fgf10/FgfR2iiib in ductal elongation, branching, epithelial proliferation, and differentiation. Based on these findings, a model is proposed depicting the localized expression and feedback loops between several morphoregulatory factors in the developing prostate that contribute to tightly regulated branching morphogenesis. Similar to Shh-ptc-gli, neonatal estrogen exposure downregulates Fgf10, FgfR2iiib, and Bmp7 expression in the dorsolateral prostate while ventral lobe expression of these genes is unaffected. Lateral prostate organ culture experiments demonstrate that growth and branching inhibition as well as Fgf10/FgfR2iiib suppression are mediated directly at the prostatic level. Furthermore, exogenous Fgf10 fully rescues the growth and branching deficits due to estrogen exposure. Together, these studies demonstrate that alterations in Fgf10 signaling are a proximate cause of Shh-ptc-gli and Bmp7 downregulation that together result in branching inhibition of the dorsolateral prostate following neonatal estrogen exposure.