Branching morphogenesis is a critical step in the development of many epithelial organs. The phosphoinositide-3-kinase (PI3K) pathway has been identified as a central component of this process but the precise role has not been fully established. Herein we sought to determine the role of PI3K in murine lung branching using a series of pharmacological inhibitors directed at this pathway. The pan-class I PI3K inhibitor ZSTK474 greatly enhanced the branching potential of whole murine lung explants as measured by an increase in the number of terminal branches compared with controls over 48 hours. This enhancement of branching was also observed following inhibition of the downstream signalling components of PI3K, Akt and mTOR. Isoform selective inhibitors of PI3K identified that the alpha isoform of PI3K is a key driver in branching morphogenesis. To determine if the effect of PI3K inhibition on branching was specific to the lung epithelium or secondary to an effect on the mesenchyme we assessed the impact of PI3K inhibition in cultures of mesenchyme-free lung epithelium. Isolated lung epithelium cultured with FGF7 formed large cyst-like structures, whereas co-culture with FGF7 and ZSTK474 induced the formation of defined branches with an intact lumen. Together these data suggest a novel role for PI3K in the branching program of the murine embryonic lung contradictory to that reported in other branching organs. Our observations also point towards PI3K acting as a morphogenic switch for FGF7 signalling.