The WT1 tumor suppressor gene encodes a zinc finger transcription factor expressed in differentiating glomerular podocytes. Complete inactivation of WT1 in the mouse leads to failure of mesenchymal induction and renal agenesis, an early developmental phenotype that prevents analysis of subsequent stages in glomerular differentiation [1]. In humans with Denys-Drash Syndrome, a heterozygous germline mutation in WT1 is associated with specific defects in glomeruli and an increased risk for developing Wilms Tumor [2,3]. WT1 target genes implicated in cell cycle regulation and cellular proliferation have been proposed [4], but the link between WT1 function and glomerular differentiation is unexplained. Here, we show that inducible expression of WT1 in rat embryonic kidney cell precursors leads to the induction of endogenous Podocalyxin, the major structural membrane protein of glomerular podocytes, which is implicated in the maintenance of filtration slits. Binding of WT1 to conserved elements within the Podocalyxin gene promoter results in potent transcriptional activation, and the specific expression pattern of Podocalyxin in the developing kidney mirrors that of WT1 itself. These observations support a role for WT1 in the specific activation of a glomerular differentiation program in renal precursors and provide a molecular basis for the glomerulonephropathy that is characteristic of Denys-Drash Syndrome.