Treatment of pseudoglandular stage fetal lungs in vitro with the pan-retinoic acid receptor (pan-RAR) antagonist, BMS493, reduces retinoic acid receptor beta (Rarb) gene expression within the proximal bronchial tubules and increases explant bud formation. Treatment with retinoic acid (RA) increases Rarb expression and reduces explant bud formation through a signaling mechanism involving RARβ. Together these data suggest that RA through RARβ provides morphogenetic stabilizing activity to the proximal tubules during lung branching morphogenesis. Here we further investigate RA-mediated morphogenetic stabilization of the proximal respiratory tubules during fetal lung development. We demonstrate that Rarb isoform transcripts are the only known Rar transcripts to specifically localize to the proximal tubules and that RAREhsp68lacZ reporter transgene activity reveals endogenous RA signaling activity within these same proximal tubules. Furthermore, the expression patterns of the RA-producing enzyme retinaldehyde dehydrogenase 1 (Raldh1), as well as of transforming growth factor-3β (Tgfb3), Foxa2, and the cystic fibrosis transmembrane conductance regulator (Cftr) within the proximal tubules are all altered by the application of either RA or BMS493 in vitro. We therefore discuss an interbud/proximal tubule signaling niche involving feedback between Rarb expression and Raldh1-mediated synthesis of RA. We suggest that this feedback favors interbud morphogenetic stability by increasing expression of morphoregulatory molecules such as TGFβ3 and Foxa2, thus promoting bronchial tubule formation rather than continual budding and branching. The relationship between this RAR signaling center and the previously described distal bud signaling center is also addressed.