Development of the airways, alveoli, and the pulmonary vasculature in the fetus is a process that is precisely controlled. One of the growth factors involved, vascular endothelial growth factor (VEGF), is so critical for embryonic development that in the mouse, elimination of just a single allele is lethal. In the early stages of lung development, the mouse VEGF gene expresses three isoforms (120, 164, and 188) in a distinct temporo-spatial pattern, suggesting a specific function for each. We engineered mice that express only VEGF 120, to study the role of VEGF isoforms in lung development. Lung vessel development in these mice was studied by scanning electron microscopy of Mercox casts of lung vasculature. Airway and air-blood barrier development was analyzed by light microscopy, transmission electron microscopy, immunohistochemistry, and morphometry. In all VEGF120/120 fetuses and pups, lung vascular casts were smaller and less dense compared with 120/+ and wild-type littermates. Although the generation count of pre-acinar vessels was similar in all three genotypes, the most peripheral vessels were dilated and were more widely separated in 120/120 fetuses of all ages, compared with 120/+ and wild-type littermates. In addition, 120/120 animals had fewer air-blood barriers and a decreased airspace-parenchyma ratio compared with 120/+ and wild-type littermates. We concluded that the absence of VEGF 164 and 188 isoforms impairs lung microvascular development and delays airspace maturation, indicating an essential role for heparin-binding VEGF isoforms in normal lung development.