Fgf10 has a prominent role in organogenesis. In the developing lung, Fgf10 is dynamically expressed in the distal mesenchyme from where it diffuses and activates its epithelial receptor, Fgfr2b, to trigger budding. Little is known about how Fgf10 expression is regulated. Here we have identified a mouse lung‐specific mesenchymal cell line, MLg, which expresses endogenous Fgf10 and responds to known regulators of Fgf10 in a way that is reminiscent of the early lung. To gain insights into the mechanisms involved in the transcriptional regulation of Fgf10 in these cells, we have cloned and analyzed approximately a 4.5 kb region of the mouse Fgf10 promoter. Promoter deletion analysis and Luciferase reporter assays revealed an upstream region of the Fgf10 promoter with selective enhancer activity in the MLg, but not in the non‐lung‐derived cell line NIH3T3. Our data suggest that a potential lung mesenchyme‐specific enhancer may exist within this region of the Fgf10 promoter. J. Cell. Biochem. 103: 1886–1894, 2007. © 2007 Wiley‐Liss, Inc.