Urogenital system development in mammals requires the coordinated differentiation of two distinct tissues, the ductal epithelium and the nephrogenic mesenchyme, both derived from the intermediate mesoderm of the early embryo. The former give rise to the genital tracts, ureters and kidney collecting duct system, whereas mesenchymal components undergo epithelial transformation to form nephrons in both the mesonephric (embryonic) and metanephric (definitive) kidney. Pax-2 is a transcriptional regulator of the paired-box family and is widely expressed during the development of both ductal and mesenchymal components of the urogenital system. We report here that Pax-2 homozygous mutant newborn mice lack kidneys, ureters and genital tracts. We attribute these defects to dysgenesis of both ductal and mesenchymal components of the developing urogenital system. The Wolffian and Mullerian ducts, precursors of male and female genital tracts, respectively, develop only partially and degenerate during embryogenesis. The ureters, inducers of the metanephros are absent and therefore kidney development does not take place. Mesenchyme of the nephrogenic cord fails to undergo epithelial transformation and is not able to form tubules in the mesonephros. In addition, we show that the expression of specific markers for each of these components is de-regulated in Pax-2 mutants. These data show that Pax-2 is required for multiple steps during the differentiation of intermediate mesoderm. In addition, Pax-2 mouse mutants provide an animal model for human hereditary kidney diseases.