The functions of Pax2 during renal development are many. It organizes caudal descent of the nephric duct, emergence of the ureteric bud, branching morphogenesis, and sustained arborization of the collecting system. In this review, we use lessons from the study of Pax2 as organizing principles to focus on the developmental processes which, if disrupted, might lead to renal hypoplasia in humans. We consider the problem of renal hypoplasia as a continuum, ranging from renal agenesis to subtle congenital nephron deficits. Early failure in the first two developmental stages (e.g. homozygous inactivation of Pax2) should preclude formation of metanephric kidneys and cause bilateral renal agenesis, incompatible with life. Interference with the later stages affects the extent of branching morphogenesis (e.g. heterozygous Pax2 mutations). Although the resulting nephron deficits are compatible with life, they may be moderately severe and account for up to 40% of the children in dialysis and transplant units around the world. Finally, the effect of Pax2 on apoptosis in the branching ureteric bud seems to imply a quantitative process which is finely tuned. Modest changes in this program could account for subtle nephron deficits in "normal" humans and increased risk of hypertension or susceptibility to acquired renal disease later in life.