The Wilms tumor-suppressor gene, WT1, plays a key role in urogenital development, and WT1 dysfunction is implicated in both neoplastic (Wilms tumor, mesothelioma, leukemias, and breast cancer) and nonneoplastic (glomerulosclerosis) disease. The analysis of diseases linked specifically with WT1 mutations, such as Denys–Drash syndrome (DDS), can provide valuable insight concerning the role of WT1 in development and disease. DDS is a rare childhood disease characterized by a nephropathy involving mesangial sclerosis, XY pseudohermaphroditism, and/or Wilms tumor (WT). DDS patients are constitutionally heterozygous for exonic point mutations in WT1, which include mutations predicted to truncate the protein within the C-terminal zinc finger (ZF) region. We report that heterozygosity for a targeted murine Wt1 allele, Wt1^tmT396, which truncates ZF3 at codon 396, induces mesangial sclerosis characteristic of DDS in adult heterozygous and chimeric mice. Male genital defects also were evident and there was a single case of Wilms tumor in which the transcript of the nontargeted allele showed an exon 9 skipping event, implying a causal link between Wt1 dysfunction and Wilms tumorigenesis in mice. However, the mutant WT1^tmT396 protein accounted for only 5% of WT1 in both heterozygous embryonic stem cells and the WT. This has implications regarding the mechanism by which the mutant allele exerts its effect.