Nicotine exposure alters normal homeostatic pulmonary epithelial-mesenchymal paracrine signaling pathways, resulting in alveolar interstitial fibroblast (AIF)-to-myofibroblast (MYF) transdifferentiation. Though this has been described under in vitro conditions, it is not known if the same phenomenon also takes place in vivo. A well-established rodent model of lung damage following perinatal nicotine exposure was used. By probing for the well-established markers of fibroblast differentiation (parathyroid hormone-related protein [PTHrP], peroxisome proliferator-activated receptor gamma [PPARgamma], adipocyte differentiation-related protein, alpha-smooth muscle actin, and fibronectin) at the mRNA, protein, and tissue levels, the authors provide the first in vivo evidence for nicotine-induced AIF-to-MYF transdifferentiation. In addition, these data also provide the first evidence for nicotine-induced up-regulation of Wnt signaling, accompanying the down-regulation of PTHrP/PPARgamma signaling in vivo following nicotine exposure during pregnancy. These data provide an integrated mechanism for in utero nicotine-induced lung damage and how it could permanently alter the "developmental program" of the developing lung by disrupting critically important epithelial-mesenchymal interactions. More importantly, these data are likely to provide specific interventions to augment the pulmonary mesenchymal lipogenic pathway to ameliorate nicotine-induced in utero lung injury.