The mesoderm around the primary lung buds is an important source of signals for driving epithelial growth and differentiation and branching morphogenesis. It is a source of specialized cell types, including pericytes, parabronchial smooth muscle, myofibroblasts, and other cells of the alveoli, such as the lipid-storing cells underlying the AEC2 cells. In the human lung, the mesoderm also gives rise to cartilage around the distal airways.