Schematic model of Shh/Fgf10/Bmp4 signalling during lung branching morphogenesis. Shh is produced and secreted by epithelium in tips of growing buds, binds Ptc in the mesenchyme and releases Smo function, which then results in the activation of the Gli2 and Gli3 transcription factors (green). Bmp4 and Fgf10 seem not to be target genes of Gli2 and Gli3. Fgf10 is elaborated by the mesenchyme overlaying the tips of the epithelial buds, and binds and activates Fgfr2 in the epithelium, which then results in a chemotactic and mitogenic response (blue). Bmp4 is expressed in the epithelium of the growing buds but also weakly in the adjacent mesenchyme. It is secreted and acts on Bmpr present in both mesenchyme and epithelium (red).