Branching morphogenesis is central to epithelial organogenesis. In the developing kidney, the epithelial ureteric bud invades the metanephric mesenchyme, which directs the ureteric bud to undergo repeated branching. A soluble factor(s) in the conditioned medium of a metanephric mesenchyme cell line is essential for multiple branching morphogenesis of the isolated ureteric bud. The identity of this factor had proved elusive, but it appeared distinct from factors such as HGF and EGF receptor ligands that have been previously implicated in branching morphogenesis of mature epithelial cell lines. Using sequential column chromatography, we have now purified to apparent homogeneity an 18 kDa protein, pleiotrophin, from the conditioned medium of a metanephric mesenchyme cell line that induces isolated ureteric bud branching morphogenesis in the presence of glial cell-derived neurotrophic factor. Pleiotrophin alone was also found to induce the formation of branching tubules in an immortalized ureteric bud cell line cultured three-dimensionally in an extracellular matrix gel. Consistent with an important role in ureteric bud morphogenesis during kidney development, pleiotrophin was found to localize to the basement membrane of the developing ureteric bud in the embryonic kidney. We suggest that pleiotrophin could act as a key mesenchymally derived factor regulating branching morphogenesis of the ureteric bud and perhaps other embryonic epithelial structures.