In the normal mouse embryo, Bmp4 is expressed in mesenchymal cells surrounding the Wolffian duct (WD) and ureter stalk, whereas bone morphogenetic protein (BMP) type I receptor genes are transcribed either ubiquitously (Alk3) or exclusively in the WD and ureter epithelium (Alk6). Bmp4 heterozygous null mutant mice display, with high penetrance, abnormalities that mimic human congenital anomalies of the kidney and urinary tract (CAKUT), including hypo/dysplastic kidneys, hydroureter, ectopic ureterovesical (UV) junction, and double collecting system. Analysis of mutant embryos suggests that the kidney hypo/dysplasia results from reduced branching of the ureter, whereas the ectopic UV junction and double collecting system are due to ectopic ureteral budding from the WD and accessory budding from the main ureter, respectively. In the cultured metanephros deprived of sulfated glycosaminoglycans (S-GAGs), BMP4-loaded beads partially rescue growth and elongation of the ureter. By contrast, when S-GAGs synthesis is not inhibited, BMP4 beads inhibit ureter branching and expression of Wnt 11, a target of glial cell-derived neurotrophic factor signaling. Thus, Bmp4 has 2 functions in the early morphogenesis of the kidney and urinary tract. One is to inhibit ectopic budding from the WD or the ureter stalk by antagonizing inductive signals from the metanephric mesenchyme to the illegitimate sites on the WD. The other is to promote the elongation of the branching ureter within the metanephros, thereby promoting kidney morphogenesis.