Development of external genitalia in mammalian embryos requires tight coordination of a complex series of morphogenetic events involving outgrowth,proximodistal and dorsoventral patterning, and epithelial tubulogenesis. Hypospadias is a congenital defect of the external genitalia that results from failure of urethral tube closure. Although this is the second most common birth defect in humans, affecting one in every 250 children, the molecular mechanisms that regulate morphogenesis of the mammalian urethra are poorly understood. We report that mice lacking the IIIb isoform of fibroblast growth factor receptor 2 (Fgfr2) exhibit severe hypospadias. Urethral signaling regions, as indicated by Shh and Fgf8 expression, are established in Fgfr2-IIIb null mice; however, cell proliferation arrests prematurely and maturation of the urethral epithelium is disrupted. Fgfr2-IIIb -/- mutants fail to maintain the progenitor cell population required for uroepithelial renewal during tubular morphogenesis. In addition, we show that antagonism of the androgen receptor (AR) leads to loss of Fgfr2-IIIb and Fgf10 expression in the urethra, and an associated hypospadias phenotype, suggesting that these genes are downstream targets of AR during external genital development. Genitourinary defects resulting from disruption of AR activity, by either genetic or environmental factors, may therefore involve negative regulation of the Fgfr2 pathway. This represents the first example of how the developing genitourinary system integrates cues from systemically circulating steroid hormones with a locally expressed growth factor pathway.