Glial-Cell-Line-Derived Neurotrophic Factor (GDNF) is the major mesenchyme-derived regulator of ureteric budding and branching during nephrogenesis. The ligand activates on the ureteric bud epithelium a receptor complex composed of Ret and GFRalpha1. The upstream regulators of the GDNF receptors are poorly known. A Notch ligand, Jagged1 (Jag1), co-localises with GDNF and its receptors during early kidney morphogenesis. In this study we utilized both in vitro and in vivo models to study the possible regulatory relationship of Ret and Notch pathways. Urogenital blocks were exposed to exogenous GDNF, which promotes supernumerary ureteric budding from the Wolffian duct. GDNF-induced ectopic buds expressed Jag1, which suggests that GDNF can, directly or indirectly, up-regulate Jag1 through Ret/GFRalpha1 signalling. We then studied the role of Jag1 in nephrogenesis by transgenic mice constitutively expressing human Jag1 in Wolffian duct and its derivatives under HoxB7 promoter. Jag1 transgenic mice showed a spectrum of renal defects ranging from aplasia to hypoplasia. Ret and GFRalpha1 are normally downregulated in the Wolffian duct, but they were persistently expressed in the entire transgenic duct. Simultaneously, GDNF expression remained unexpectedly low in the metanephric mesenchyme. In vitro, exogenous GDNF restored the budding and branching defects in transgenic urogenital blocks. Renal differentiation apparently failed because of perturbed stimulation of primary ureteric budding and subsequent branching. Thus, the data provide evidence for a novel crosstalk between Notch and Ret/GFRalpha1 signalling during early nephrogenesis.