The Wilms' Tumour gene WT1 has important functions during development. Knock-out mice were shown to have defects in the urogenital system and to die at embryonic day E13.5, probably due to heart failure. Using a lacZ reporter gene inserted into a YAC construct, we demonstrate that WT1 is expressed in the early proepicardium, the epicardium and the subepicardial mesenchymal cells (SEMC). Lack of WT1 leads to severe defects in the epicardial layer and a concomitant absence of SEMCs, which explains the pericardial bleeding and subsequent embryonic death observed in Wt1 null embryos. We further show that a human-derived WT1 YAC construct is able to completely rescue heart defects, but only partially rescues defects in the urogenital system. Analysis of the observed hypoplastic kidneys demonstrate a continuous requirement for WT1 during nephrogenesis, in particular, in the formation of mature glomeruli. Finally, we show that the development of adrenal glands is also severely affected in partially rescued embryos. These data demonstrate a variety of new functions for WT1 and suggest a general requirement for this protein in the formation of organs derived from the intermediate mesoderm.