During lung development the extracellular matrix regulates cellular growth, migration, and differentiation. Pulmonary cells reciprocate and regulate extracellular matrix formation by elaborating a variety of peptides that affect gene transcription, RNA processing, translation, and posttranslational modifications of proteins. This regulation involves prenatal events such as the branching of airways and postnatal events such as alveolar septal formation. Normal airway branching requires multiple extracellular matrix proteins, proteoglycans, and the expression of cellular receptors for these molecules. Alveolar septal formation exemplifies how cells regulate the production, export, and deposition of an important structural protein, elastin, which is essential for the development of normal gas exchange units. Repair after injury to the adult lung engages some of the same factors that regulate lung development. However, in this case, inflammatory cells that enter the lung after injury elaborate many of these regulatory peptides. The effects of these peptides on the resident cells, which produce extracellular matrix, are a major determinant of whether the repair restores normal pulmonary architecture or progresses to fibrosis and additional impairment of gas exchange.