Co-ordinated signalling between airway epithelium and surrounding mesenchyme tissue creates the conducting airway and vasculature of the fetal lung. The branching rate of both structures is precise and depends upon molecular “time keepers” such as Sprouty2 (Spry2) that determine the inter-branch length and branch positioning. However, the cues which link vascular growth to the airway branching process are not well understood. The primary inducer of airway tube elongation is fibroblast growth factor-10 (FGF-10) which induces growth of the airway epithelium by activating its receptor, FGFR2b. This is antagonised by Spry2 which determines the duration of receptor signaling to the ERK1/2 and PI3-kinase pathways and, consequently, the length of each airway branch. Given its pivotal role in the airway branching process, we hypothesised that Spry2 would integrate FGF-10-stimulated airway outgrowth with the process of vascular signalling in airway epithelium. To test this, immortalised human bronchial epithelial cells (16HBE14o- or “HBE”) were stably transformed with either non-genomic (control) shRNA or Spry2 shRNA. Cells were then exposed to a concentration range of FGF-10 (0.01-1μg.ml-1) in serum-depleted medium at the PO2 of the fetal lung (3%O2) or at ambient PO2 (21% O2). Vascular signalling was measured using a luciferase reporter gene to report hypoxia inducible factor-1α (HIF-1α) activity and qPCR to report vascular endothelial growth factor-A (VEGF-A) mRNA abundance relative to 18SRNA. Spry2 mRNA abundance in Spry2-shRNA cells was <20% of that in control cells. This level of knockdown sustained HIF-1α protein abundance irrespective of FGF-10 treatment and PO2, but its effect on HIF-1α-driven reporter gene activity was strongly oxygen dependent. Thus, at 3% O2, FGF-10 evoked a concentration dependent decline in HIF-1α activity in control cells whereas Spry2 knockdown abolished the FGF-10 effect and suppressed HIF-1α activity by ~5-fold relative to control shRNA cells (P<0.05; n=4). At 21% O2, however, HIF-1α activity was significantly induced by Spry2 knockdown compared to the control cells and was associated with a corresponding increase in VEGF-A mRNA expression (P<0.05; n=6). We conclude that Spry2 participates in the regulation of vascular signalling from airway epithelial cells and that its major effect is to repress HIF-1α mediated gene expression at elevated PO2.