Salivary glands provide an excellent model for the study of epithelial-mesenchymal interactions. We have looked at the interactions involved in the early initiation and development of murine salivary glands using classic recombination experiments and knockout mice. We show that salivary gland epithelium, at thickening and initial bud stages, is able to direct salivary gland development in non-gland pharyngeal arch mesenchyme at early stages. The early salivary gland epithelium is therefore able to induce gland development in non-gland tissue. This ability later shifts to the mesenchyme, with non-gland epithelium, such as from the limb bud, able to form a branching gland when combined with pseudoglandular stage gland mesenchyme. This shift appears to involve Fgf signalling, with signals from the epithelium inducing Fgf10 in the mesenchyme. Fgf10 then signals back to the epithelium to direct gland down-growth and bud development. These experiments highlight the importance of epithelial-mesenchymal signalling in gland initiation, controlling where, when and how many salivary glands form.