Extensive study has provided considerable insight into the mechanisms governing branching morphogenesis and developmental maturation of the pulmonary epithelium. The process by which the vascular tree arises in the mesodermal mesenchyme of the developing lung, however, is not known. Because normal epithelial branching and differentiation have been shown to be dependent on interactions with the lung mesenchyme, we hypothesized that the developing pulmonary vasculature is dependent on a reciprocal interaction with pulmonary epithelium. In this study we have defined the temporal and spatial expression of flk‐1 mRNA, which encodes an endothelial cell‐specific vascular endothelial growth factor (VEGF) receptor, in fetal and neonatal rat lung. Flk‐1‐positive cells were observed in the lung at every prenatal stage from fetal day 11 through birth, demonstrating that vascularization has been initiated as soon as the lung evaginates from the foregut epithelium. The spatial distribution of vascular precursors was distinct and consistent in early lung (fetal days 11–16): clusters of flk‐1‐positive cells were localized in the mesenchyme closely apposed to the developing epithelium. This spatial relationship between vascular precursors and the developing epithelium suggested that vascular development in the lung may be dependent on interactions between the two tissue types. To investigate this possibility, day‐13 distal lung mesenchyme was cultured in the presence and absence of lung epithelium. Lung mesenchyme cultured in the absence of epithelium degenerated significantly, and few flk‐1‐positive cells were maintained. In contrast, lung mesenchyme recombined with lung epithelium contained abundant flk‐1‐positive cells, and their spatial distribution mimicked that observed in vivo. These studies provide the first detailed information regarding the temporal and spatial pattern of pulmonary vascularization in early development and suggest that tissue interactions play an important role in growth and maintenance of the developing lung vasculature. Dev Dyn;217:159–169. © 2000 Wiley‐Liss, Inc.