SUMMARYMammalian respiratory system development is regulated by complex reciprocal signaling events that take place between epithelial cells and the surrounding mesenchymal cells; however, mesenchymal heterogeneity and function in the developing human lung is poorly understood. We interrogated single cell RNA sequencing data from multiple human lung specimens and identified a mesenchymal cell population present during development that is highly enriched for expression of the WNT agonist R-SPONDIN2 (RSPO2), and we found that adjacent epithelial bud tip progenitors are enriched for the RSPO2 receptor LGR5. By carrying out functional experiments using organoid models, lung explant cultures, and FACS-isolated RSPO2+ mesenchyme, we show that RSPO2 is a critical niche cue that potentiates WNT signaling in human lung progenitors to maintain their multipotency.