In CKD, the risk of kidney failure and death depends on the severity of proteinuria, which correlates with the extent of podocyte loss and glomerular scarring. We investigated whether proteinuria contributes directly to progressive glomerulosclerosis through the suppression of podocyte regeneration and found that individual components of proteinuria exert distinct effects on renal progenitor survival and differentiation toward a podocyte lineage. In particular, albumin prevented podocyte differentiation from human renal progenitors in vitro by sequestering retinoic acid, thus impairing retinoic acid response element (RARE)-mediated transcription of podocyte-specific genes. In mice with Adriamycin nephropathy, a model of human FSGS, blocking endogenous retinoic acid synthesis increased proteinuria and exacerbated glomerulosclerosis. This effect was related to a reduction in podocyte number, as validated through genetic podocyte labeling in NPHS2.Cre;mT/mG transgenic mice. In RARE-lacZ transgenic mice, albuminuria reduced retinoic acid bioavailability and impaired RARE activation in renal progenitors, inhibiting their differentiation into podocytes. Treatment with retinoic acid restored RARE activity and induced the expression of podocyte markers in renal progenitors, decreasing proteinuria and increasing podocyte number, as demonstrated in serial biopsy specimens. These results suggest that albumin loss through the damaged filtration barrier impairs podocyte regeneration by sequestering retinoic acid and promotes the generation of FSGS lesions. Our findings may explain why reducing proteinuria delays CKD progression and provide a biologic rationale for the clinical use of pharmacologic modulators to induce regression of glomerular diseases.