Mammalian lungs begin as an outpocket of the foregut, and depend on multiple stages of branching morphogenesis and alveogenesis to reach their final form. An examination of fgf receptor gene expression indicated that all four receptors (fgfr-1 to fgfr-4) are expressed in postnatal lungs at varying levels. We show that mice homozygous for a targeted mutation of fgfr-4 exhibited no overt abnormalities in the lungs or any other organ. However, mice doubly homozygous for disruptions of the fgfr-3 and fgfr-4 genes display novel phenotypes not present in either single mutant, which include pronounced dwarfism and lung abnormalities. Lungs of fgfr-3^−/−fgfr-4^−/− animals, which are normal at birth, are completely blocked in alveogenesis and do not form secondary septae to delimit alveoli. Consequently, air spaces in the lung are expanded and no alveoli can be seen. The mutant lungs failed to downregulate postnatal elastin deposition despite their normal levels of surfactant expression and cell proliferation. These data revealed a cooperative function of FGFR-3 and FGFR-4 to promote the formation of alveoli during postnatal lung development.