Regulation of the balance between progenitor self-renewal and differentiation is critical to development. In the mammalian kidney, reciprocal signaling between three lineages (stromal, mesenchymal and ureteric) ensures correct nephron progenitor self-renewal and differentiation. Loss of either the atypical cadherin Fat4 or its ligand Dachsous1 (Dchs1) results in expansion of the mesenchymal nephron progenitor pool, called the condensing mesenchyme (CM). This has been proposed to be due to misregulation of the Hippo kinase pathway transcriptional co-activator YAP. Here, we use tissue-specific deletions to prove that Fat4 acts non-autonomously in the renal stroma to control nephron progenitors. We show that loss of Yap from the CM in a Fat4-null background does not reduce the expanded CM, indicating Fat4 regulates the CM independent of YAP. Analysis of Six2-/-;Fat4-/- double mutants demonstrates that excess progenitors in Fat4 mutants are dependent on Six2, a critical regulator of nephron progenitor self-renewal. Electron microscopy reveals that cell organization is disrupted in Fat4 mutants. Gene expression analysis demonstrates that the expression of Notch and FGF pathway components are altered in Fat4 mutants. Finally, we show that Dchs1, and its paralog Dchs2 function in a partially redundant fashion to regulate the number of nephron progenitors. Our data supports a model in which FAT4 in the stroma binds to DCHS1/2 in the CM to restrict progenitor self-renewal.