Developmental expression of marker genes representative of different mature cell types can be used to study differentiation of cell lineages. We used immunohistochemistry to study expression in developing mouse lung of calcitonin gene-related peptide (CGRP), Clara cell 10-KD protein (CC10), and surfactant protein-A (SP-A), markers that are differentially expressed in neuroendocrine cells, Clara cells, and Type II alveolar cells. Two distinct developmental phases were revealed. The earlier phase (embryonic days 13-15; E13-E15) was characterized by CGRP, CC10, and SP-A immunostaining in all epithelial cells of the distal airways, with the three patterns being virtually identical in adjacent sections. The later phase (E16-E18) was characterized by emergence of staining of the differentiated cell types. These expression patterns were recapitulated in serumless organ culture, demonstrating that information necessary to generate both phases of gene expression is present within the lung analage by E11. We conclude that CGRP, CC10, and SP-A are co-expressed in most or all cells of the distal lung epithelium at E13-E15 and later become restricted to different cell lineages. This transient expression in progenitor cells of gene products characteristic of diverse differentiated cell types may reflect an underlying mechanism of gene regulation.