Formation of kidney tissue requires the generation of kidney precursor cells and their subsequent differentiation into nephrons, the functional filtration unit of the kidney. Here we report that the gene odd-skipped related 1 (Odd1) plays an important role in both these processes. Odd1 is the earliest known marker of the intermediate mesoderm, the precursor to all kidney tissue. It is localized to mesenchymal precursors within the mesonephric and metanephric kidney and is subsequently downregulated upon tubule differentiation. Mice lacking Odd1 do not form metanephric mesenchyme, and do not express several other factors required for metanephric kidney formation, including Eya1, Six2, Pax2, Sall1 and Gdnf. In transient ectopic expression experiments in the chick embryo, Odd1 can promote expression of the mesonephric precursor markers Pax2 and Lim1. Finally, persistent expression of Odd1 in chick mesonephric precursor cells inhibits differentiation of these precursors into kidney tubules. These data indicate that Odd1 plays an important role in establishing kidney precursor cells, and in regulating their differentiation into kidney tubular tissue.