Although microRNAs (miRNAs) are postulated to fine-tune many developmental processes, their relationships with specific targets and tissues remain largely undefined. The mesenchymal transcription factor Barx1 controls spleen and stomach morphogenesis and is required to specify stomach-specific epithelium in adjacent endoderm. Barx1 expression is precisely regulated in space and time, with a sharp drop in stomach levels after epithelial specification. We tested the hypothesis that specific miRNAs mediate this marked decline in Barx1 levels. Depletion of the miRNA-processing enzyme Dicer in cultured stomach mesenchyme and conditional Dicer gene deletion in mice significantly increased Barx1 levels, disrupted stomach and intestine development and caused spleen agenesis. Computational and experimental studies identified miR-7a and miR-203 as candidate miRNAs that regulate Barx1 and are expressed in inverse proportion to it in the fetal mouse stomach. Through specific interactions with cognate sequences in the Barx1 3' untranslated region, miR-7a and miR-203 repress Barx1 expression in stomach mesenchymal cells and its function in inducing gastric epithelium. These results indicate that miRNAs are required for proper digestive tract organogenesis and that miR-7a and miR-203 control expression of the stomach homeotic regulator Barx1.