Hoechst-effluxing cells (side population cells) are a rare subset of cells found in adult tissues that are highly enriched for stem and progenitor cell activity. To identify potential stem and progenitor cells during lung development, we generated gene expression profiles for CD45- and CD45+ side population cells in the embryonic day 17.5 lung. We found that side population cells comprise 1% of total embryonic day 17.5 lung cells (55% CD45+, 45% CD45-). Gene profiling data demonstrated an overrepresentation of endothelial genes within the CD45- side population. We used expression of several distinct genes to identify two types of CD45- side population cells: 1) von Willebrand factor+/smooth muscle actin+ cells that reside in the muscular layer of select large vessels and 2) von Willebrand factor+/intercellular adhesion molecule+ cells that reside within the endothelial layer of select small vessels. Gene profiling of the CD45+ side population indicated an overrepresentation of genes associated with myeloid cell differentiation. Consistent with this, culturing CD45+ side population cells was associated with induction of mature dendritic markers (CD86). The microarray results suggested that expression of myeloperoxidase and proteinase-3 might be used to identify CD45+ side population cells. By immunohistochemistry, we found that myeloperoxidase+/proteinase-3+ cells represent a small subset of total CD45+ cells in the embryonic day 17.5 lung and that they reside in the mesenchyme and perivascular regions. This is the first detailed information regarding the phenotype and localization of side population cells in a developing organ.