The villi of the human and chick gut are formed in similar stepwise progressions, wherein the mesenchyme and attached epithelium first fold into longitudinal ridges, then a zigzag pattern, and lastly individual villi. We find that these steps of villification depend on the sequential differentiation of the distinct smooth muscle layers of the gut, which restrict the expansion of the growing endoderm and mesenchyme, generating compressive stresses that lead to their buckling and folding. A quantitative computational model, incorporating measured properties of the developing gut, recapitulates the morphological patterns seen during villification in a variety of species. These results provide a mechanistic understanding of the formation of these elaborations of the lining of the gut, essential for providing sufficient surface area for nutrient absorption.