Wnt proteins are required for induction of nephrons in mouse metanephric kidneys, but the downstream pathways that mediate tubule induction and epithelial differentiation have remained obscure. The intracellular mechanisms by which Wnt signaling mediates nephron induction in embryonic kidney mesenchymes were studied. First is shown that transient exposure of isolated kidney mesenchymes to structurally different glycogen synthase kinase-3 (GSK3) inhibitors lithium or 6-bromoindirubin-3'-oxime results in abundant epithelial differentiation and full segregation of nephrons. Shown further by mice with genetically disrupted ureteric bud or Wolffian duct development is that this nephrogenic competence arises independent of the influence of Wolffian duct-derived epithelia. Analysis of the intracellular signaling cascades downstream of GSK3 inhibition revealed stabilization of beta-catenin and upregulation of Lef1 and Tcf1, both events that are associated with the active canonical Wnt signaling. Last, genetic evidence that metanephric mesenchyme-specific stabilization of beta-catenin is sufficient to induce nephron differentiation in isolated kidney mesenchymes, similar to that induced by GSK3 inhibitors, is provided. These data show that activation of canonical Wnt pathway is sufficient to induce nephrogenesis and suggest that this pathway mediates the nephron induction in murine kidney mesenchymes.