Once developed, end-stage renal disease cannot be reversed by any current therapy. Bone morphogenetic protein-7 (BMP-7), however, is a possible treatment for reversing end-stage renal disease. Previously, we showed that the BMP antagonist uterine sensitization-associated gene-1 (USAG-1, also known as ectodin and sclerostin domain-containing 1) negatively regulates the renoprotective action of BMP-7. Here, we show that the ratio between USAG-1 and BMP-7 expression increased dramatically in the later stage of kidney development, with USAG-1 expression overlapping BMP-7 only in differentiated distal tubules. Examination of USAG-1 expression in developing kidney indicated that a mosaic of proximal and distal tubule marker-positive cells reside side by side in the immature nephron. This suggests that each cell controls its own fate for becoming a proximal or distal tubule cell. In kidney injury models, the ratio of USAG-1 to BMP-7 expression decreased with kidney damage but increased after subsequent kidney regeneration. Our study suggests that USAG-1 expression in a kidney biopsy could be useful in predicting outcome.