Müllerian inhibiting substance (MIS) is a glycoprotein hormone required for normal male reproductive tract development; it is presumed to signal through a heteromeric complex of type I and type II receptors. MIS exposure produces a paracrine-mediated regression of the embryonic Müllerian duct with histological changes consistent with apoptosis. MIS has also been shown to inhibit fetal lung development in vitro and in vivo, although the mechanism of this inhibition is unknown. The primordial lung and gonad are anatomically proximate on embryonic day 13.5, raising the possibility of a paracrine-mediated influence of MIS in male embryos on lung as well as MIS effecting dissolution of the Müllerian duct. We hypothesized that a negative regulatory event(s) might occur in the lung, as occurs in the duct, at the onset of MIS protein expression; thus, apoptosis and branching morphogenesis were studied in explanted fetal rat lungs incubated with proteolytically activated MIS. MIS exposure resulted in reduced total lung bud number as well as lung perimeter length. Explanted lungs exposed to MIS also exhibited numerous apoptotic bodies. To assess whether this MIS-induced phenomenon in lung might be mediated by the MIS type II receptor (MIS RII), reverse transcriptase-PCR performed on multiple fetal rat lung RNA samples using oligonucleotide primers designed from the 3'-untranslated region of rat MIS RII complementary DNA showed a product of the expected size that when sequenced was nearly identical to rat MIS RII. Northern blot analysis using polyadenylated fetal rat lung RNA and a 3'-MIS RII probe revealed a 2-kilobase transcript that was also seen in testicular messenger RNA. These studies show that the putative ligand binding receptor for MIS is expressed in embryonic lung, where MIS negatively modulates branching and activates apoptosis. We speculate that the mechanism of MIS-induced inhibition of lung development in the male fetus begins with MIS binding to the MIS RII, followed by a signaling cascade resulting in delayed airway branching temporally associated with enhanced apoptosis.