Fibroblast growth factor 10 (Fgf10) is a key regulator of diverse organogenetic programs during mouse development, particularly branching morphogenesis. Fgf10-null mice suffer from lung and limb agenesis as well as cecal and colonic atresia and are thus not viable. To date, the Mlcv1v-nLacZ-24 transgenic mouse strain (referred to as Fgf10LacZ), which carries a LacZ insertion 114 kb upstream of exon 1 of Fgf10 gene, has been the only strain to allow transient lineage tracing of Fgf10-positive cells. Here, we describe a novel Fgf10Cre-ERT2 knock-in line (Fgf10iCre) in which a Cre-ERT2-IRES-YFP cassette has been introduced in frame with the ATG of exon 1 of Fgf10 gene. Our studies show that Cre-ERT2 insertion disrupts Fgf10 function. However, administration of tamoxifen to Fgf10iCre; Tomatoflox double transgenic embryos or adult mice results in specific labeling of Fgf10-positive cells, which can be lineage-traced temporally and spatially. Moreover, we show that the Fgf10iCre line can be used for conditional gene inactivation in an inducible fashion during early developmental stages. We also provide evidence that transcription factors located in the first intron of Fgf10 gene are critical for maintaining Fgf10 expression over time. Thus, the Fgf10iCre line should serve as a powerful tool to explore the functions of Fgf10 in a controlled and stage-specific manner.