The nephric duct plays a central role in orchestrating the development of the mammalian urogenital system. Lim 1 is a homeobox gene required for head and urogenital development in the mouse but most Lim 1-deficient embryos die by embryonic day 10. To determine the role of Lim 1 in the development of the nephric duct, we conditionally removed Lim 1 in the nephric epithelium just after the nephric duct begins to form using a floxed allele of Lim 1 and Pax2-cre transgenic mice. We report that Lim 1 conditional knockout mice have renal hypoplasia and hydronephrosis. Developmental studies revealed that the caudal portion of the nephric duct did not reach the urogenital sinus at embryonic day 10.5, formation of the ureteric bud was delayed, the ureteric bud was smaller and branching of the ureteric bud reduced. We also found that the nephric duct was generally not maintained and extension of the Müllerian duct inhibited. Molecular analysis indicated that Pax2 was expressed normally but the expression of Wnt9b and E-cadherin in the nephric duct was markedly altered. These results suggest that Lim 1 influences nephric duct extension and ureteric bud outgrowth by regulating and or maintaining the differentiation of the nephric epithelium.