MicroRNAs (miRNAs) are a large and growing class of small, non-coding, regulatory RNAs that control gene expression predominantly at the post-transcriptional level. The production of most functional miRNAs depends on the enzymatic activity of Dicer, an RNase III class enzyme. To address the potential action of Dicer-dependent miRNAs in mammalian kidney development, we conditionally ablated Dicer function within cells of nephron lineage and the ureteric bud-derived collecting duct system. Six2Cre-mediated removal of Dicer activity from the progenitors of the nephron epithelium led to elevated apoptosis and premature termination of nephrogenesis. Thus, Dicer action is important for maintaining the viability of this critical self-renewing progenitor pool and, consequently, development of a normal nephron complement. HoxB7Cre-mediated removal of Dicer function from the ureteric bud epithelium led to the development of renal cysts. This was preceded by excessive cell proliferation and apoptosis, and accompanied by disrupted ciliogenesis within the ureteric bud epithelium. Dicer removal also disrupted branching morphogenesis with the phenotype correlating with downregulation of Wnt11 and c-Ret expression at ureteric tips. Thus Dicer, and by inference Dicer-dependent miRNA activity, have distinct regulatory roles within different components of the developing mouse kidney. Furthermore, an understanding of miRNA action may provide new insights into the etiology and pathogenesis of renal cyst-based kidney disease.