It has been proposed that smooth muscle differentiation may physically sculpt airway epithelial branches in mammalian lungs. Serum response factor (SRF) acts with its co-factor myocardin to activate the expression of contractile smooth muscle markers. In the adult, however, smooth muscle exhibits a variety of phenotypes beyond contractile, and these are independent of SRF/myocardin-induced transcription. To determine whether a similar phenotypic plasticity is exhibited during development, we deleted Srf from the mouse embryonic pulmonary mesenchyme. Srf-mutant lungs branch normally, and the mesenchyme displays mechanical properties indistinguishable from controls. scRNA-seq identified an Srf-null smooth muscle cluster, wrapping the airways of mutant lungs, which lacks contractile smooth muscle markers but retains many features of control smooth muscle. Srf-null embryonic airway smooth muscle exhibits a synthetic phenotype, compared with the contractile phenotype of mature wild-type airway smooth muscle. Our findings identify plasticity in embryonic airway smooth muscle and demonstrate that a synthetic smooth muscle layer promotes airway branching morphogenesis.