LMX1B encodes a LIM-homeodomain transcription factor. Mutations in LMX1B cause nail-patella syndrome (NPS), an autosomal dominant disease with skeletal abnormalities, nail hypoplasia, and nephropathy. Expression of glomerular basement membrane (GBM) collagens is reduced in Lmx1b(-/-) mice, suggesting one basis for NPS nephropathy. Here, we show that Lmx1b(-/-) podocytes have reduced numbers of foot processes, are dysplastic, and lack typical slit diaphragms, indicating an arrest in development. Using antibodies to podocyte proteins important for podocyte function, we found that Lmx1b(-/-) podocytes express near-normal levels of nephrin, synaptopodin, ZO-1, alpha3 integrin, and GBM laminins. However, mRNA and protein levels for CD2AP and podocin were greatly reduced, suggesting a cooperative role for these molecules in foot process and slit diaphragm formation. We identified several LMX1B binding sites in the putative regulatory regions of both CD2AP and NPHS2 (podocin) and demonstrated that LMX1B binds to these sequences in vitro and can activate transcription through them in cotransfection assays. Thus, LMX1B regulates the expression of multiple podocyte genes critical for podocyte differentiation and function. Our results indicate that reduced levels of proteins associated with foot processes and the glomerular slit diaphragm likely contribute, along with reduced levels of GBM collagens, to the nephropathy associated with NPS.