Development of the gastrointestinal (GI) tract depends on reciprocal epithelial-mesenchymal cell signaling. Here, we demonstrate a role for platelet-derived growth factor-A (PDGF-A) and its receptor, PDGFR-(alpha), in this process. Mice lacking PDGF-A or PDGFR-(alpha) were found to develop an abnormal GI mucosal lining, including fewer and misshapen villi and loss of pericryptal mesenchyme. Onset of villus morphogenesis correlated with the formation of clusters of PDGFR-(alpha) positive cells, ‘villus clusters’, which remained located at the tip of the mesenchymal core of the growing villus. Lack of PDGF-A or PDGFR-(alpha) resulted in progressive depletion of PDGFR-(alpha) positive mesenchymal cells, the formation of fewer villus clusters, and premature expression of smooth muscle actin (SMA) in the villus mesenchyme. We found that the villus clusters were postmitotic, expressed BMP-2 and BMP-4, and that their formation correlated with downregulated DNA synthesis in adjacent intestinal epithelium. We propose a model in which villus morphogenesis is initiated as a result of aggregation of PDGFR-(α) positive cells into cell clusters that subsequently function as mesenchymal centers of signaling to the epithelium. The role of PDGF-A seems to be to secure renewal of PDGFR-(alpha) positive cells when they are consumed in the initial rounds of cluster formation.