Organogenesis is regulated by mesenchymal-epithelial signaling events that induce expression of cell-type specific transcription factors critical for cellular proliferation, differentiation and appropriate tissue patterning. While mesenchymal transcription factors play a key role in mesenchymal-epithelial interactions, transcriptional networks in septum transversum and splanchnic mesenchyme remain poorly characterized. Forkhead Box F1 (FOXF1) transcription factor is expressed in mesenchymal cell lineages; however, its role in organogenesis remains uncharacterized due to early embryonic lethality of Foxf1-/- mice. In the present study, we generated mesenchyme-specific Foxf1 knockout mice (Dermo1-Cre Foxf1-/-) and demonstrated that FOXF1 is required for development of respiratory, cardiovascular and gastrointestinal organ systems. Deletion of Foxf1 from mesenchyme caused embryonic lethality in the middle of gestation due to multiple developmental defects in the heart, lung, liver and esophagus. Deletion of Foxf1 inhibited mesenchyme proliferation and delayed branching lung morphogenesis. Gene expression profiling of micro-dissected distal lung mesenchyme and ChIP sequencing of fetal lung tissue identified multiple target genes activated by FOXF1, including Wnt2, Wnt11, Wnt5A and Hoxb7. FOXF1 decreased expression of the Wnt inhibitor Wif1 through direct transcriptional repression. Furthermore, using a global Foxf1 knockout mouse line (Foxf1-/-) we demonstrated that FOXF1-deficiency disrupts the formation of the lung bud in foregut tissue explants. Finally, deletion of Foxf1 from smooth muscle cell lineage (smMHC-Cre Foxf1-/-) caused hyper-extension of esophagus and trachea, loss of tracheal and esophageal muscle, mispatterning of esophageal epithelium and decreased proliferation of smooth muscle cells. Altogether, FOXF1 promotes lung morphogenesis by regulating mesenchymal-epithelial signaling and stimulating cellular proliferation in fetal lung mesenchyme.