Rationale: Prenatal airway smooth muscle (ASM) peristalsis appears coupled to lung growth. Moreover ASM progenitors produce fibroblast growth factor-10 (FGF10) for lung morphogenesis. Congenital diaphragmatic hernia (CDH) is associated with lung hypoplasia, FGF10 deficiency and postnatal ASM dysfunction. We hypothesised ASM dysfunction emerges in tandem with, and may contribute towards, the primordial lung hypoplasia that precedes experimental CDH. Methods: Spatial origin and frequency of ASM peristaltic waves were measured in normal and hypoplastic rat lungs cultured from day 13.5 of gestation (lung hypoplasia was generated by nitrofen dosing of pregnant dams). Longitudinal lung growth was assayed by bud counts and tracing photomicrographs of cultures. Coupling of lung growth and peristalsis was tested by stimulation studies using serum, FGF10 or nicotine, and inhibition studies with nifedipine or UO126 (MEK1/2 inhibitor). Results: In normal lung, ASM peristalsis is developmentally regulated: proximal ASM becomes quiescent (whilst retaining capacity for cholinergic-stimulated peristalsis). However, in hypoplastic lung, spontaneous proximal ASM activity persists. FGF10 corrects this aberrant ASM activity in tandem with improved growth. Stimulation and inhibition studies showed that, unlike normal lung, changes in growth or peristalsis are not consistently accompanied by parallel modulation of the other. Conclusion: ASM peristalsis undergoes FGF10-regulated spatiotemporal development coupled to lung growth: this process is disrupted early in lung hypoplasia. ASM dysfunction emerges in tandem with and may therefore contribute towards lung hypoplasia in CDH.