The mammalian lung forms its elaborate tree-like structure following a largely stereotypical branching sequence. While a number of genes have been identified to play essential roles in lung branching, what coordinates the choice between branch growth and new branch formation has not been elucidated. Here we show that loss of FGF-activated transcription factor genes, Etv4 and Etv5 (collectively Etv), led to prolonged branch tip growth and delayed new branch formation. Unexpectedly, this phenotype is more similar to mutants with increased rather than decreased FGF activity. Indeed, an increased Fgf10 expression is observed, and reducing Fgf10 dosage can attenuate the Etv mutant phenotype. Further evidence indicates that ETV inhibits Fgf10 via directly promoting Shh expression. SHH in turn inhibits local Fgf10 expression and redirects growth, thereby initiating new branches. Together, our findings establish ETV as a key node in the FGF-ETV-SHH inhibitory feedback loop that dictates branching periodicity.