Kidney epithelia have two separate origins. Collecting ducts develop in the manner of most glandular organs, by growth and branching of a bud derived from a pre-existing epithelium. Excretory tubules develop by a direct mesenchyme to epithelium transition (MET), which is induced by the tips of the developing collecting duct system as it invades a specialised area of mesenchymal cells. The process by which these metanephrogenic mesenchyme cells achieve MET can be divided into several stages; induction, acquisition of stem cell character, fate determination, condensation, epitheliogenesis, polarisation and maturation. Progress through these stages is regulated by 'checkpoints' at which permission to proceed requires specific signals. The stages of development are characterised by the expression of new combinations of genes that code for transcription factors (Hox genes, Pax genes, zinc finger proteins), signalling effectors (growth factors, Wnts, receptor tyrosine kinases) and morphoregulatory molecules (CAMs, cadherins, extracellular matrix ligands). This review summarises current knowledge about the molecular interactions that control MET in the kidney, and also about how their failure might result in Wilms' tumour, one of the most common cancers of childhood.