BMP-7, a member of the bone morphogenic protein subfamily (BMPs) of the transforming growth factor-β superfamily of secreted growth factors, is abundantly expressed in the fetal kidney. The precise role of this protein in renal physiology or pathology is unknown. A cDNA that encodes rat BMP-7 was cloned and used as a probe to localize BMP-7 mRNA expression by in situ hybridization in the adult rat kidney. The highest expression of BMP-7 mRNA could be seen in tubules of the outer medulla. In glomeruli, a few cells, mainly located at the periphery of the glomerular tuft, showed specific and strong signals. Also, high BMP-7 mRNA expression could be localized to the adventitia of renal arteries, as well as to the epithelial cell layer of the renal pelvis and the ureter. Preliminary evidence suggests that BMP-7 enhances recovery when infused into rats with ischemia-induced acute renal failure. We examined BMP-7 mRNA expression in kidneys with acute renal failure induced by unilateral renal artery clamping. BMP-7 mRNA abundance as analyzed by solution hybridization was reduced in ischemic kidneys after 6 and 16 h of reperfusion compared with the contralateral kidney. In situ hybridization in ischemic kidneys showed a marked decrease of BMP-7 mRNA in the outer medulla and in glomeruli. Utilizing rat metanephric mesenchymal cells in culture, we also demonstrate that BMP-7 induces epithelial cell differentiation. Taken together, these data suggest that BMP-7 is important in both stimulating and maintaining a healthy differentiated epithelial cell phenotype.