Branching morphogenesis is a widespread mechanism used to increase the surface area of epithelial organs. Many signaling systems steer development of branched organs, but it is still unclear which cellular processes are regulated by the different pathways. We have used the development of the air sacs of the dorsal thorax of Drosophila to study cellular events and their regulation via cell-cell signaling. We find that two receptor tyrosine kinases play important but distinct roles in air sac outgrowth. Fgf signaling directs cell migration at the tip of the structure, while Egf signaling is instrumental for cell division and cell survival in the growing epithelial structure. Interestingly, we find that Fgf signaling requires Ras, the Mapk pathway, and Pointed to direct migration, suggesting that both cytoskeletal and nuclear events are downstream of receptor activation. Ras and the Mapk pathway are also needed for Egf-regulated cell division/survival, but Pointed is dispensable.