During lung development, epithelial cells bud out from the forming foregut into the surrounding mesenchyme and form the bronchial tree in a process termed branching morphogenesis. During this process, the epithelial cells are in close contact and interaction with the surrounding mesenchyme as well as endothelial cells of the forming lung vascular arbour. Some key mechanisms of lung branching morphogenesis have been uncovered in mice and are thought to be likely to function similarly in humans. However, studying human development on the cellular and molecular level requires novel approaches. To that purpose, we have established a three dimentional human cell culture model for lung branching morphogenesis. In this system, the human bronchial epithelial cell line VA10 is cultured together with endothelial cells in a laminin-rich basement membrane matrix. After nine days in culture, spheric colonies of VA10 cells start budding and form branching structures which show morphological and molecular characteristics of developing lung tissue. We have studied the role of TGF-beta signaling and partial epithelial-to-mesenchymal transition (EMT) in our model. Several markers of EMT are expressed in the growing parts of branching colonies. Blocking TGF-beta signaling leads to abnormal branching and a strong EMT phenotype. We are currently studying the connection between partial EMT, TGF-beta signaling and the control of branch outgrowth.