We study singularity formation in the lubrication model for the unforced Hele‐Shaw system, describing the breaking in two of a fluid droplet confined between two narrowly spaced glass plates. By varying the initial data, we exhibit four different scenarios: (1) the droplet breaks in finite time, with two pinch points moving toward each other and merging at the singular time; (2) the droplet breaks in finite time, with two asymmetric pinch points propagating away from each other; (3) the droplet breaks in finite time, with a single symmetric pinch point; or (4) the droplet relaxes to a stable equilibrium shape without a finite time breakup. Each of the three singular scenarios has a self‐similar structure with different scaling laws; the first scenario has not been observed before in other Hele‐Shaw studies. We demonstrate instabilities of the second and third scenarios, in which the solution changes its behavior at a thickness that can be arbitrarily small depending on the initial condition. These transitions can be identified by examining the structure of the solution in the intermediate scaling region. ©1996 American Institute of Physics.