Nephrons comprise a blood filter and an epithelial tubule that is subdivided into proximal and distal segments, but what directs this patterning during kidney organogenesis is not well understood. Using zebrafish, we found that the HNF1β paralogues hnf1ba and hnf1bb, which encode homeodomain transcription factors, are essential for normal segmentation of nephrons. Embryos deficient in hnf1ba and hnf1bb did not express proximal and distal segment markers, yet still developed an epithelial tubule. Initiating hnf1ba/b expression required Pax2a and Pax8, but hnf1ba/b-deficient embryos did not exhibit the expected downregulation of pax2a and pax8 at later stages of development, suggesting complex regulatory loops involving these molecules. Embryos deficient in hnf1ba/b also did not express the irx3b transcription factor, which is responsible for differentiation of the first distal tubule segment. Reciprocally, embryos deficient in irx3b exhibited downregulation of hnf1ba/b transcripts in the distal early segment, suggesting a segment-specific regulatory circuit. Deficiency of hnf1ba/b also led to ectopic expansion of podocytes into the proximal tubule domain. Epistasis experiments showed that the formation of podocytes required wt1a, which encodes the Wilms' tumor suppressor-1 transcription factor, and rbpj, which encodes a mediator of canonical Notch signaling, downstream or parallel to hnf1ba/b. Taken together, these results suggest that Hnf1β factors are essential for normal segmentation of nephrons during kidney organogenesis.