Organs have to develop at precisely determined sites to ensure functionality of the whole organism. Organogenesis is typically regulated by a series of interactions between morphologically distinct tissues. The developing tooth of the mouse is an excellent model to study these processes and we are beginning to understand the networks regulating reciprocal tissue interactions at the molecular level. Synergistic and antagonistic effects of signaling molecules including FGFs and BMPs are recursively used to induce localized responses in the adjacent tissue layer (mesenchyme or epithelium). However, at different phases of odontogenesis these secreted growth factors have distinct effects and at the same time they are regulated by different upstream factors. The mesenchymal transcription factors Msx1 and Pax9 are initially regulated by epithelial FGFs and BMPs, but subsequently they function upstream of these signaling molecules. This cascade provides a molecular model by which reciprocal tissue interactions are controlled.