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Histone demethylases have emerged as important players in developmental processes. Jumonji domain containing-3 (Jmjd3) has been identified as a key histone demethylase that plays a critical role in the regulation of gene expression; however, the in vivo function of Jmjd3 in embryonic development remains largely unknown. To this end, we generated Jmjd3 global and conditional knockout mice. Global deletion of Jmjd3 induces perinatal lethality associated with defective lung development. Tissue and stage-specific deletion revealed that Jmjd3 is dispensable in the later stage of embryonic lung development. Jmjd3 ablation downregulates the expression of genes critical for lung development and function, including AQP-5 and SP-B. Jmjd3-mediated alterations in gene expression are associated with locus-specific changes in the methylation status of H3K27 and H3K4. Furthermore, Jmjd3 is recruited to the SP-B promoter through interactions with the transcription factor Nkx2.1 and the epigenetic protein Brg1. Taken together, these findings demonstrate that Jmjd3 plays a stage-dependent and locus-specific role in the mouse lung development. Our study provides molecular insights into the mechanisms by which Jmjd3 regulates target gene expression in the embryonic stages of lung development. [ABSTRACT FROM AUTHOR]