Kidney development starts with the reciprocal induction of mesenchymal and ureteric bud cells which leads to condensation, epithelialization, and nephron formation in the mesenchyme. To identify changes in gene expression during these processes, we compared differential display polymerase chain reaction (PCR) profiles of uninduced and induced mesenchymal cells. In vitro kidney development in the form of the transfilter organ culture system was used to generate homogeneous cell populations for this type of comparison. Here we describe the isolation of known and novel genetags from this screening. Among the known genes the ufo receptor tyrosine kinase, sFRP2, and the groucho related gene (grg) were verified as being upregulated upon induction. With four of eight novel genes tested, Northern blot analysis proved to be sensitive enough to confirm differential expression. To improve sensitivity and gain additional spatial information, in situ hybridization was performed. Expression analysis of two differential display PCR products, designated C0-5 and M2-4, demonstrated the cell-specific and dynamic expression of these novel genetags in the developing kidney and other tissues. C0-5 transcripts were expressed in the ureteric bud, S-shaped bodies, and in the collecting system. Signals for M2-4, a gene not detectable by Northern blot analysis, were only found in condensing mesenchymal cells and early differentiation stages, but not in the collecting ducts. The large fraction of novel genetags from the present screening that have not yet been analyzed provides a rich resource to clone genetic networks regulating early nephrogenesis.