Over the last few years there has been considerable progress in analysing the cellular basis of nephrogenesis and a start has been made towards elucidating the underlying molecular controls of this process. In this review we begin by describing how the kidney forms and then consider recent work on the mechanisms underlying these events. We review evidence implicating a neural basis for kidney induction and go on to show how the induced metanephric mesenchyme aggregates and forms condensations which themselves polarize to form epithelia and filtering nephrons. We then discuss how changes in the extracellular matrix are implicated in these processes and how the expression of nuclear transcription factors may regulate the final phenotype of the kidney. Finally, we show how the study of nephrogenesis is beginning to shed light on the aetiology of a range of disorders that include renal malformations, renal tumours, and inherited glomerular and polycystic kidney diseases.