The primary excretory organ in vertebrates is the kidney, which is responsible for blood filtration, solute homeostasis and pH balance. These functions are carried out by specialized epithelial cells organized into tubules called nephrons. Each of these cell types arise during embryonic development from a mesenchymal stem cell pool through a process of mesenchymal-to-epithelial transition (MET) that requires sequential action of specific Wnt signals. Induction by Wnt9b directs cells to exit the stem cell niche and express Wnt4, which is both necessary and sufficient for the formation of epithelia. Without either factor, MET fails, nephrons do not form and newborn mice die owing to kidney failure. Ectopic Notch activation in stem cells induces mass differentiation and exhaustion of the stem cell pool. To investigate whether this reflected an interaction between Notch and Wnt, we employed a novel gene manipulation strategy in cultured embryonic kidneys. We show that Notch activation is capable of inducing MET in the absence of both Wnt4 and Wnt9b. Following MET, the presence of Notch directs cells primarily to the proximal tubule fate. Only nephron stem cells have the ability to undergo MET in response to Wnt or Notch, as activation in the closely related stromal mesenchyme has no inductive effect. These data demonstrate that stem cells for renal epithelia are uniquely poised to undergo MET, and that Notch activation can replace key inductive Wnt signals in this process. After MET, Notch provides an instructive signal directing cells towards the proximal tubule lineage at the expense of other renal epithelial fates.