Receptors for advanced glycation end-products (RAGE) are cell-surface receptors expressed by pulmonary tissue that influence alveolar type (AT) II-ATI transition required for normal alveolar formation. However, the precise contribution of RAGE in interactions between pulmonary epithelium and splanchnic mesenchyme during lung organogenesis remains uncertain. To test the hypothesis that RAGE misexpression adversely affects lung morphogenesis, conditional transgenic mice were generated that overexpress RAGE. Mice that overexpress RAGE throughout embryogenesis experienced 100% mortality and significant lung hypoplasia coincident with large, vacuous areas in the periphery when compared with normal airway and alveolar architecture observed in control mouse lungs. Flow cytometry and immunohistochemistry employing cell-specific markers for distal (forkhead box protein A2) and respiratory (thyroid transcription factor-1) epithelium, ATII cells (pro-surfactant protein-C), and ATI cells (T1-α) demonstrated anomalies in key epithelial cell populations resulting from RAGE up-regulation. These results reveal that precise regulation of RAGE expression is required during lung formation. Furthermore, abundant RAGE results in profound alterations in epithelial cell differentiation that culminate in severe respiratory distress and perinatal lethality.