The developmental, regulatory gene Pax-2 is activated during early kidney morphogenesis and repressed in mature renal epithelium. Persistent Pax-2 expression is also observed in a variety of kidney tumors. Yet, little is known about the signals regulating this transient expression pattern in the developing kidney. We have examined the spatial and temporal expression patterns of Pax-2 and the Wilm's tumor suppresser protein WT1 with specific antibodies in developing mouse kidneys. A marked increase in WT1 protein levels coincided precisely with down-regulation of the Pax-2 gene in the individual precursor cells of the visceral glomerular epithelium, suggesting a direct effect of the WT1 repressor protein on Pax-2 regulatory elements. To examine whether WT1 could directly repress Pax-2 transcription, binding of WT1 to three high affinity sites in the 5' untranslated Pax-2 leader sequence was demonstrated by DNAseI footprinting analysis. Furthermore, co-transfection assays using CAT reporter constructs under the control of Pax-2 regulatory sequences demonstrated WT1-dependent transcriptional repression. These three WT1 binding sites were also able to repress transcription, in a WT1-dependent manner, when inserted between a heterologous promoter and the reporter gene. The data indicate that Pax-2 is a likely target gene for WT1 and suggest a direct link, at the level of transcriptional regulation, between a developmental control gene, active in undifferentiated and proliferating cells, and a known tumor suppressor gene.