Mesenchymal cells are required for the induction of epithelial development during mammalian organogenesis. Keratinocyte growth factor (KGF) is a mesenchymally derived mitogen with specific activity for epithelial cells, suggesting that it may play a role in mediating these interactions. To further evaluate this hypothesis, in situ hybridization was used to examine the spatial distribution of KGF and KGF receptor (KGFR) transcripts during organogenesis and limb formation in mouse embryos (days 14.5 through 16.5). To facilitate this aim, mouse KGF cDNA clones were isolated. There was extensive identity between the deduced mouse KGF protein sequence and that of its human and rat cognates, indicating that this gene has been highly conserved during mammalian evolution. In addition, mouse KGF protein was purified from fibroblasts and demonstrated to be structurally and functionally similar to human KGF protein. For organs within the integumental, respiratory, gastrointestinal, and urogenital systems, whose development is dependent upon mesenchymal-epithelial interactions, KGF mRNA was detected in mesenchymal cells, while epithelial cells expressed transcripts for the KGFR, KGF and KGFR mRNA was also expressed in certain other tissues such as perichondrium, cartilage of developing bones, developing skeletal muscle, and visceral smooth muscle whose development is not regulated by mesenchymal-epithelial interactions. KGF expression was also detected in tissues isolated from human embryos, suggesting similar functions for KGF in human development. Taken together, our results suggest that KGF plays an important role in mediating mesenchymal-epithelial interactions during organogenesis, but may also have other developmental functions in tissues not governed by such interactions.