The transformation of a two-dimensional epithelial sheet into various three-dimensional structures is a critical process in generating the diversity of animal forms. Previous studies of epithelial folding have revealed diverse mechanisms driven by epithelium-intrinsic or -extrinsic forces. Yet little is known about the biomechanical basis of epithelial splitting, which involves extreme folding and eventually a topological transition breaking the epithelial tube. Here, we leverage tracheal-esophageal separation (TES), a critical and highly conserved morphogenetic event during tetrapod embryogenesis, as a model system for interrogating epithelial tube splitting both in vivo and ex vivo. Comparing TES in chick and mouse embryos, we identified an evolutionarily conserved, compressive force exerted by the mesenchyme surrounding the epithelium, as being necessary to drive epithelial constriction and splitting. The compressive force is mediated by localized convergent flow of mesenchymal cells towards the epithelium. We further found that Sonic Hedgehog (SHH) secreted by the epithelium functions as an attractive cue for mesenchymal cells. Removal of the mesenchyme, inhibition of cell migration, or loss of SHH signaling all abrogate TES, which can be rescued by externally applied pressure. These results unveil the biomechanical basis of epithelial splitting and suggest a mesenchymal origin of tracheal-esophageal birth defects.