Mechanical forces are increasingly recognized to regulate morphogenesis, but how this is accomplished in the context of the multiple tissue types present within a developing organ remains unclear. Here, we use bioengineered 'microfluidic chest cavities' to precisely control the mechanical environment of the fetal lung. We show that transmural pressure controls airway branching morphogenesis, the frequency of airway smooth muscle contraction, and the rate of developmental maturation of the lungs, as assessed by transcriptional analyses. Time-lapse imaging reveals that branching events are synchronized across distant locations within the lung, and are preceded by long-duration waves of airway smooth muscle contraction. Higher transmural pressure decreases the interval between systemic smooth muscle contractions and increases the rate of morphogenesis of the airway epithelium. These data reveal that the mechanical properties of the microenvironment instruct crosstalk between different tissues to control the development of the embryonic lung.