The juxtaposition of a dense capillary network to lung epithelial cells is essential for air-blood gas exchange. Defective lung vascular development can result in bronchopulmonary dysplasia and alveolar capillary dysplasia. Although vascular endothelial growth factor A (Vegfa) is required for formation of the lung capillary network, little is known regarding the factors that regulate the density and location of the distal capillary plexus and the expression pattern of Vegfa. Here, we show that fibroblast growth factor 9 (FGF9) and sonic hedgehog (SHH) signaling to lung mesenchyme, but not to endothelial cells, are each necessary and together sufficient for distal capillary development. Furthermore, both gain- and loss-of-function of FGF9 regulates Vegfa expression in lung mesenchyme, and VEGF signaling is required for FGF9-mediated blood vessel formation. FGF9, however, can only partially rescue the reduction in capillary density found in the absence of SHH signaling, and SHH is unable to rescue the vascular phenotype found in Fgf9^-/- lungs. Thus, both signaling systems regulate distinct aspects of vascular development in distal lung mesenchyme. These data suggest a molecular mechanism through which FGF9 and SHH signaling coordinately control the growth and patterning of the lung capillary plexus,and regulate the temporal and spatial expression of Vegfa.