The mammalian kidney develops by a process called branching morphogenesis,which is driven by reciprocal inductive interactions between the metanephric blastema and ureteric bud (UB) embryonic tissue. To further investigate the inhibitory role of the BMP2 receptor ALK3 in kidney branching morphogenesis,Hu et al. generated mice expressing a constitutively active form of ALK3 in the UB (see p. 2753). As expected, mutant kidneys undergo less branching, but this surprisingly leads to medullary cystic dysplasia rather than to kidney hypoplasia. The transition from decreased branching to cystic dysplasia is accompanied by the increased expression of β-catenin and TCF, and by the formation ofβ-catenin/SMAD1 (an ALK3 effector) complexes. As such, ALK3 signalling appears to upregulate β-catenin expression via an unknown mechanism during this pathogenic event, providing new directions for studies of human renal dysplasia.