As in most organs, the emerging theme in kidney development is the importance of cross-talk between several tissues and cell lineages to allow morphogenesis to proceed in a complex but highly regulated way. Over the past few years, knock-out and transgenic analyses in mice and evolutionary comparison with non-mammalian species have been particularly instrumental in identifying molecules with crucial functions for tissue-tissue interactions. The transcription factors Wt1 and Eya1, the signalling molecules Gdnf and LIF and the receptors c-Ret and GdnfRalpha have been demonstrated to fulfil fundamental roles in the first step of metanephric induction, the outgrowth of the ureter. Signalling by members of the Wnt, BMP and FGF families, regulated by transcription factors such as Pax2, mediates nephrogenesis by adjusting the balance between the ureteric bud epithelium, stromal and nephrogenic tissues. The stromal tissue, neglected for many years, has been shown to serve important functions in regulating the growth of nephrons. Finally, we have also begun to gain insight into the molecular events underlying patterning of the nephron into distinct functional units including glomerulus, proximal and distal tubule.