The mammalian kidney is composed of thousands of nephrons that are formed through reiterative induction of a mesenchymal-to-epithelial transformation by a population of nephron progenitor cells. The number of nephrons in human kidneys ranges from several hundred thousand to nearly a million, and low nephron number has been implicated as a risk factor for kidney disease as an adult. Bmp7 is among a small number of growth factors required to support the proliferation and self-renewal of nephron progenitor cells, in a process that will largely determine the final nephron number. Once induced, each nephron begins as a simple tubule that undergoes extensive proliferation and segmental differentiation. Bmp7 is expressed both by nephron progenitor cells and the ureteric bud derivative branches that induce new nephrons. Here, we show that, in mice, Bmp7 expressed by progenitor cells has a major role in determining nephron number; nephron number is reduced to one tenth its normal value in its absence. Postnatally, Bmp7 also drives proliferation of the proximal tubule cells, and these ultimately constitute the largest segment of the nephron. Bmp7 appears to act through Smad 1,5,9(8), p38 and JNK MAP kinase. In the absence of Bmp7, nephrons undergo a hypertrophic process that involves p38. Following a global inactivation of Bmp7, we also see evidence for Bmp7-driven growth of the nephron postnatally. Thus, we identify a role for Bmp7 in supporting the progenitor population and driving expansion of nephrons to produce a mature kidney.