The respiratory primordium is positioned and its territory is defined in the foregut. The visceral mesoderm of the respiratory primordium acquires the inducing potential that is necessary for endodermal budding morphogenesis and respiratory endoderm formation. Tbx4, a member of the T-box transcription factor gene family, was specifically expressed in the visceral mesoderm of the lung primordium. To analyze the function of Tbx4, we ectopically expressed Tbx4 in the visceral mesoderm of the foregut using in ovo electroporation. Ectopic Tbx4 induced ectopic bud formation in the esophagus by activating the expression of Fgf10. Conversely, interference of Tbx4 function resulted in repression of Fgf10 expression and in failure of lung bud formation. In addition, ectopic Tbx4 or Fgf10 also induced ectopic expression of Nkx2.1, a marker gene specific for the respiratory endoderm, in the underlying esophagus endoderm. When the border of the Tbx4 expression domain, which demarcates the respiratory tract and the esophagus, was disturbed by misexpression of Tbx4, formation of the tracheo-esophageal septum failed. These results suggested that Tbx4 governs multiple processes during respiratory tract development; i.e. the initial endodermal bud formation, respiratory endoderm formation, and septation of the respiratory tract and the esophagus.