Transgenic and gene knock-out studies demonstrated that the mouse Forkhead Box m1 (Foxm1 or Foxm1b) transcription factor (previously called HFH-11B, Trident, Win, or MPP2) is essential for hepatocyte entry into mitosis during liver development, regeneration, and liver cancer. Targeted deletion of Foxm1 gene in mice produces an embryonic lethal phenotype due to severe abnormalities in the development of liver and heart. In this study, we show for the first time that Foxm1(-/-) lungs exhibit severe hypertrophy of arteriolar smooth muscle cells and defects in the formation of peripheral pulmonary capillaries as evidenced by significant reduction in platelet endothelial cell adhesion molecule 1 staining of the distal lung. Consistent with these findings, significant reduction in proliferation of the embryonic Foxm1(-/-) lung mesenchyme was found, yet proliferation levels were normal in the Foxm1-deficient epithelial cells. Severe abnormalities of the lung vasculature in Foxm1(-/-) embryos were associated with diminished expression of the transforming growth factor beta receptor II, a disintegrin and metalloprotease domain 17 (ADAM-17), vascular endothelial growth factor receptors, Polo-like kinase 1, Aurora B kinase, laminin alpha4 (Lama4), and the Forkhead Box f1 transcription factor. Cotransfection studies demonstrated that Foxm1 stimulates transcription of the Lama4 promoter, and this stimulation requires the Foxm1 binding sites located between -1174 and -1145 bp of the mouse Lama4 promoter. In summary, development of mouse lungs depends on the Foxm1 transcription factor, which regulates expression of genes essential for mesenchyme proliferation, extracellular matrix remodeling, and vasculogenesis.