Genetic studies implicate Fgf10-Fgfr2 signaling as a critical regulator of bud morphogenesis in the embryo. However, little is known about the transcriptional targets of Fgf10 during this process. Here we identified global changes in gene expression in lung epithelial explants undergoing FGF10-mediated budding in the absence of other growth factors and mesenchyme. Targets were confirmed by their localization at sites where endogenous Fgf10 signaling is active in embryonic lungs and by demonstrating their induction in intact lungs in response to local application of FGF10 protein. We show that the initial stages of budding are characterized by marked up-regulation of genes associated with cell rearrangement and cell migration, inflammatory process, and lipid metabolism but not cell proliferation. We also found that some genes implicated in tumor invasion and metastatic behavior are epithelial targets of Fgf10 in the lung and other developing organs that depend on Fgf10-Fgfr2 signaling to properly form. Our approach identifies Fgf10 targets that are common to multiple biological processes and provides insights into potential mechanisms by which Fgf signaling regulates epithelial cell behavior.