Many vertebrate organs form through the sequential and reciprocal exchange of signaling molecules between juxtaposed epithelial and mesenchymal tissues. We undertook a systems biology approach that combined the generation and analysis of large-scale spatiotemporal gene expression data with mouse genetic experiments to gain insight into the mechanisms that control epithelial-mesenchymal signaling interactions in the developing mouse molar tooth. We showed that the shift in instructive signaling potential from dental epithelium to dental mesenchyme was accompanied by temporally coordinated genome-wide changes in gene expression in both compartments. To identify the mechanism responsible, we developed a probabilistic technique that integrates regulatory evidence from gene expression data and from the literature to reconstruct a gene regulatory network for the epithelial and mesenchymal compartments in early tooth development. By integrating these epithelial and mesenchymal gene regulatory networks through the action of diffusible extracellular signaling molecules, we identified a key epithelial-mesenchymal intertissue Wnt-Bmp (bone morphogenetic protein) feedback circuit. We then validated this circuit in vivo with compound genetic mutations in mice that disrupted this circuit. Moreover, mathematical modeling demonstrated that the structure of the circuit accounted for the observed reciprocal signaling dynamics. Thus, we have identified a critical signaling circuit that controls the coordinated genome-wide expression changes and reciprocal signaling molecule dynamics that occur in interacting epithelial and mesenchymal compartments during organogenesis.