Alveoli are formed postnatally in the rat, mouse, and human. The molecular signals controlling the patterning of this developmental process are not well understood. Here we describe immunohistochemical studies that label proliferating alveolar wall cells which suggest two distinct patterns of alveologenesis: (1) a low grade, peripheral subpleural parenchymal process which occurs from P1 through to P15; and (2) a dramatic increase in central cell proliferation from P4 which is complete by P15, corresponding to the well described period of alveolar septation. We describe the temporal and spatial expression of the retinoid-synthesizing enzymes Aldh-1 and Raldh-2 in the postnatal mouse lung. Both enzymes are upregulated during the period of maximal alveolar wall cell proliferation. Aldh-1 is located in the bronchial epithelium and alveolar parenchyma, and Raldh-2 is restricted to the bronchial epithelium and pleural mesothelial cells. High-pressure liquid chromatography (HPLC) reveals that rapidly septating lungs have relatively simple chromatographic profiles; in contrast, the adult lungs have a complex profile that includes many novel retinoids. These data suggest two patterns of alveolar proliferation with temporal and spatial association of the enzymes Aldh-1 and Raldh-2 and a dynamic role for different retinoids in both the septating and adult mouse lung.