Stromal cells can direct epithelial differentiation during organ development; however, these pathways remain poorly defined. FGF signaling is essential for submandibular salivary gland development, and FGF2 can regulate proacinar cell differentiation in organoids through autocrine signaling in stromal cells. We performed scRNA Seq and identified stromal cell subsets expressing Fgf2 and Fgf10 that also express Pdgfrα. When combined with epithelial cells in organoids, MACS-sorted PDGFRα+ cells sufficiently promoted proacinar differentiation. Gene expression analysis revealed FGF2 activates the gene Bmp7 in the stroma. BMP7 could replace stromal signaling and stimulate epithelial acinar differentiation but not branching. However, in the absence of FGF2, pathway analysis revealed that the stromal cells differentiated into myofibroblasts. Myofibroblast differentiation was induced when we treated organoids with TGFβ1, which also prevented proacinar differentiation. Conversely, FGF2 reversed TGFβ's effects. Dissecting pathways driving acinar differentiation will facilitate development of regenerative therapies.