The formation of the crypt-villus axis during gut ontogeny requires continued reciprocal interactions between the endoderm and mesenchyme. Epimorphin/syntaxin 2 (epimorphin) is a mesenchymal protein expressed in the fetal gastrointestinal tract during villus morphogenesis. To elucidate its role in gut ontogeny, the epimorphin cDNA was transfected, in sense and antisense orientations, into a rat intestinal myofibroblast cell line, MIC 216. To determine the effects of epimorphin on the epithelium, myofibroblasts were cocultured with the Caco2 cell line. Caco2 cells spread in a simple monolayer over antisense-transfected cells lacking epimorphin. In contrast, sense-transfected myofibroblasts induced Caco2 cells to form compact, round clusters with small lumens. These morphologic differences were preserved in Transwell cocultures in which cell-cell contact was prevented, suggesting that epimorphin’s effects were mediated by secreted factor(s). To determine the effects of epimorphin on crypt-villus axis formation in an in vivo model, rat gut endoderm was combined with epimorphin-transfected myofibroblasts and implanted into the chick intracoelomic cavity. The grafts in which epimorphin was overexpressed revealed multiple well-formed villi with crypt-like units, whereas those in which epimorphin expression was inhibited developed into round cystic structures without crypts or villi. Of several potential secreted morphogens, only the expression of bone morphogenetic protein 4 (Bmp4) was increased in the epimorphin-transfected cells. Incubation with noggin partially blocked the transfected myofibroblasts’ effects on Caco2 colony morphology. These results indicate that mesenchymal epimorphin has profound effects on crypt-villus morphogenesis, mediated in part by secreted factor(s) including the Bmp’s.