Fgf18 is abundantly expressed in mouse embryonic lungs. To elucidate the roles of Fgf18 in mouse embryonic lung development, we examined the Fgf18-/- embryonic lungs. Although the sizes of the Fgf18-/- lungs were a little smaller in appearance than those of wild-type lungs, neither proximal nor distal airway branching in the Fgf18-/- lungs was impaired. However, the Fgf18-/- lungs at E18.5 had reduced alveolar space, thicker interstitial mesenchymal compartments, and many embedded capillaries. Cell proliferation in the Fgf18-/- lungs was also transiently reduced around E17.5, although the expression of marker genes for lung epithelial cells in the Fgf18-/- lungs was not impaired. The present findings indicate that the Fgf18 plays roles in lung alveolar development during late embryonic lung development stages. The cell proliferation during the terminal saccular stage stimulated by Fgf18 might play roles in the remodeling of the distal lung.