Pulmonary alveoli are formed, in part, by subdivision (septation) of the gas-exchange saccules of the immature lung. Septation is developmentally regulated, and failure to septate at the appropriate time is not followed by delayed spontaneous septation. We report retinoic acid receptor (RAR) beta knockout mice exhibit premature septation; in addition, they form alveoli twice as fast as wild-type mice during the period of septation but at the same rate as wild-type mice thereafter. Consistent with the perinatal effect of RARbeta knockout, RARbeta agonist treatment of newborn rats impairs septation. These results 1) identify RARbeta as the first recognized endogenous signaling that inhibits septation, 2) demonstrate premature onset of septation may be induced, and 3) show the molecular signaling regulating alveolus formation differs during and after the period of septation. Suppressing perinatal RARbeta signaling by RARbeta antagonists may offer a novel, nonsurgical, means of preventing, or remediating, failed septation in prematurely born children.