Neuregulin-1 (NRG-1) induces signal transduction through the activation of its receptor, a heterodimer of human epidermal growth factor receptors 2 and 3 (HER2/HER3). Signal transduction through this receptor/ligand system plays a critical role in the developing heart, mammary gland, and nervous systems. Previous studies showed that NRG-1-induced HER2 activation resulted in pulmonary epithelial cell proliferation in the human fetal lung. The authors hypothesized that NRG-1 further contributes to lung development and maturation by inducing branching morphogenesis. In the present study, the authors show that NRG-1, HER2, and HER3, but not HER4, are expressed in the developing mouse lung. Addition of NRG-1 to fetal lung explants increased lung branching morphogenesis by 32% (P < .05). This increase in branching was blocked by 2C4, an antibody directed against HER2 that inhibits its dimerization and subsequent NRG-1-induced signal transduction. To gain an understanding of the intracellular signaling pathways involved in NRG-1-induced branching morphogenesis, the authors specifically blocked the phosphatidylinositol-3 kinase (PI3K) and mitogen activation protein kinase (MAPK) pathways. Inhibition of PI3K signaling significantly decreased NRG-1-induced branching morphogenesis (P < .05). Inhibition of NRG-1-induced MAPK activation had no effect on explant branching morphogenesis. These data suggest that NRG-1, binding to the HER2/HER3 heterodimer receptor complex, induces pulmonary branching morphogenesis through HER2 activation of the PI3K pathway.