PDGF-A^−/− mice lack lung alveolar smooth muscle cells (SMC), exhibit reduced deposition of elastin fibres in the lung parenchyma, and develop lung emphysema due to complete failure of alveogenesis. We have mapped the expression of PDGF-A, PDGF receptor-α, tropoelastin, smooth muscle α-actin and desmin in developing lungs from wild type and PDGF-A^−/− mice of pre- and postnatal ages in order to get insight into the mechanisms of PDGF-A-induced alveolar SMC formation and elastin deposition. PDGF-A was expressed by developing lung epithelium. Clusters of PDGF-Rα-positive (PDGF-Rα⁺) mesenchymal cells occurred at the distal epithelial branches until embryonic day (E) 15.5. Between E16.5 and E17.5, PDGF-Rα⁺ cells multiplied and spread to acquire positions as solitary cells in the terminal sac walls, where they remained until the onset of alveogenesis. In PDGF-A^−/− lungs PDGF-Rα⁺ cells failed to multiply and spread and instead remained in prospective bronchiolar walls. Three phases of tropoelastin expression were seen in the developing lung, each phase characterized by a distinct pattern of expression. The third phase, tropoelastin expression by developing alveolar SMC in conjunction with alveogenesis, was specifically and completely absent in PDGF-A^−/− lungs. We propose that lung PDGF-Rα⁺ cells are progenitors of the tropoelastin-positive alveolar SMC. We also propose that postnatal alveogenesis failure in PDGF-A^−/− mice is due to a prenatal block in the distal spreading of PDGF-Rα⁺ cells along the tubular lung epithelium during the canalicular stage of lung development.