Lung development requires coordinated signaling between airway and vascular growth, but the link between these processes remains unclear. Mammalian target of rapamycin complex-1 (mTORC1) can amplify hypoxia-inducible factor-1α (HIF-1α) vasculogenic activity through an NH(2)-terminal mTOR binding (TOS) motif. We hypothesized that this mechanism coordinates vasculogenesis with the fibroblast growth factor (FGF)-10/FGF-receptor2b/Spry2 regulator of airway branching. First, we tested if the HIF-1α TOS motif participated in epithelial-mesenchymal vascular signaling. mTORC1 activation by insulin significantly amplified HIF-1α activity at fetal Po(2) (23 mmHg) in human bronchial epithelium (16HBE14o-) and induced vascular traits (Flk1, sprouting) in cocultured human embryonic lung mesenchyme (HEL-12469). This enhanced activation of HIF-1α by mTORC1 was abolished on expression of a HIF-1α (F99A) TOS-mutant and also suppressed vascular differentiation of HEL-12469 cocultures. Next, we determined if vasculogenesis in fetal lung involved regulation of mTORC1 by the FGF-10/FGFR2b/Spry2 pathway. Fetal airway epithelium displayed distinct mTORC1 activity in situ, and its hyperactivation by TSC1(-/-) knockout induced widespread VEGF expression and disaggregation of Tie2-positive vascular bundles. FGF-10-coated beads grafted into fetal lung explants from Tie2-LacZ transgenic mice induced localized vascular differentiation in the peripheral mesenchyme. In rat fetal distal lung epithelial (FDLE) cells cultured at fetal Po(2), FGF-10 induced mTORC1 and amplified HIF-1α activity and VEGF secretion without induction of ERK1/2. This was accompanied by the formation of a complex between Spry2, the cCBL ubiquitin ligase, and the mTOR repressor, TSC2, which abolished GTPase activity directed against Rheb, the G protein inducer of mTORC1. Thus, mTORC1 links HIF-1α-driven vasculogenesis with the FGF-10/FGFR2b/Spry2 airway branching periodicity regulator.