The human respiratory epithelium is derived from progenitor cells termed "bud tip progenitors,” which are regulated by reciprocal signaling with surrounding mesenchyme. Single cell RNA sequencing and spatial profiling identified an RSPO2-producing mesenchymal cell in the bud tip niche. Functional experiments using in vitro organoid models revealed that RSPO2+ mesenchymal cells signal through LGR5 on bud tip progenitors to create a high WNT signaling environment in the bud tip niche, which supports bud tip progenitor cell maintenance and multipotency.