Basic-helix-loop-helix (bHLH) proteins are transcriptional regulatory proteins that govern cell fate determination and differentiation in a variety of tissues. We have identified a novel bHLH protein, named Pod-1, that belongs to a recently-described subfamily of bHLH proteins that have essential roles in the embryonic development of mesodermal tissues. In the adult human and mouse, Pod-1 was most highly expressed in the kidney, lung and heart. In developing mouse embryos, Pod-1 was selectively expressed in mesenchymal cells at sites of epithelial-mesenchymal interaction in the kidney, lung, intestine and pancreas. Pod-1 was also expressed in visceral glomerular epithelial cells (podocytes) in the kidney, and its expression coincided with the onset of podocyte differentiation. The expression of Pod-1 in embryonic kidney explants was inhibited using antisense oligonucleotides. Inhibition of Pod-1 expression resulted in decreased mesenchymal cell condensation around the ureteric bud and a 40% decrease in ureteric branching. Pod-1 is the first tissue-restricted basic-helix-loop-helix protein that has been identified in the developing kidney where it may play a role in the regulation of morphogenetic events.