The mammalian kidney, the metanephros, is formed by a reciprocally inductive interaction between two precursor tissues, the metanephric mesenchyme and the ureteric bud. The ureteric bud induces the metanephric mesenchyme to differentiate into the epithelia of glomeruli and renal tubules. Multipotent renal progenitors that form colonies upon Wnt4 stimulation and strongly express Sall1 exist in the metanephric mesenchyme; these cells can partially reconstitute a three-dimensional structure in an organ culture setting. Six2 maintains this mesenchymal progenitor population by opposing Wnt4-mediated epithelialization. Upon epithelial tube formation, Notch2 is required for the differentiation of proximal nephron structures (podocyte and proximal tubules). In addition, the induction methods of the intermediate mesoderm, the precursor of the metanephric mesenchyme, begin to be elucidated. If derivation of metanephric mesenchyme becomes possible, we will be closer to the generation and manipulation of multiple cell lineages in the kidney.