Conditional gene targeting in mice has provided great insight into the role of gene function in kidney development and disease. Although a number of Cre-driver mouse strains already exist for the kidney, development of additional strains with unique expression patterns is needed. Here we report the generation and validation of a Tcf21/Pod1-Cre driver strain that expresses Cre recombinase throughout the condensing and stromal mesenchyme of developing kidneys and in their derivatives including epithelial components of the nephron and interstitial cells. To test the efficiency of this line, we crossed it to mice transgenic for either loss or gain of function β-catenin conditional alleles. Mice with deletion of β-catenin from Tcf21-expressing cells are born with hypoplastic kidneys, hydroureters and hydronephrosis. By contrast, Tcf21-Cre driven gain of function for β-catenin in mice results in fused midline kidneys and hypoplastic kidneys. Finally, we report the first renal mesenchymal deletion of Patched1 (Ptch1), the receptor for sonic hedgehog (Shh), which results in renal cysts demonstrating a functional role of Shh signaling pathway in renal cystogensis. In summary, we report the generation and validation of a new Cre driver strain that provides robust excision in metanephric mesenchyme.