Members of the Bone Morphogenetic Protein (BMP) family exhibit overlapping and dynamic expression patterns throughout embryogenesis. However, little is known about the upstream regulators of these important signaling molecules. There is some evidence that BMP signaling may be autoregulative as demonstrated for BMP4 during tooth development. Analysis of BMP7 expression during kidney development, in conjunction with studies analyzing the effect of recombinant BMP7 on isolated kidney mesenchyme, suggest that a similar mechanism may operate for BMP7. We have generated a beta-gal-expressing reporter allele at the BMP7 locus to closely monitor expression of BMP7 during embryonic kidney development. In contrast to other studies, our analysis of BMP7/lacZ homozygous mutant embryos, shows that BMP7 expression is not subject to autoregulation in any tissue. In addition, we have used this reporter allele to analyze the expression of BMP7 in response to several known survival factors (EGF, bFGF) and inducers of metanephric mesenchyme, including the ureteric bud, spinal cord and LiCl. These studies show that treatment of isolated mesenchyme with EGF or bFGF allows survival of the mesenchyme but neither factor is sufficient to maintain BMP7 expression in this population of cells. Rather, BMP7 expression in the mesenchyme is contingent on an inductive signal. Thus, the reporter allele provides a convenient marker for the induced mesenchyme. Interestingly LiCl has been shown to activate the Wnt signaling pathway, suggesting that BMP7 expression in the mesenchyme is regulated by a Wnt signal. Treatment of whole kidneys with sodium chlorate to disrupt proteoglycan synthesis results in the loss of BMP7 expression in the mesenchyme whereas expression in the epithelial components of the kidney are unaffected. Heterologous recombinations of ureteric bud with either limb or lung mesenchyme demonstrate that expression of BMP7 is maintained in this epithelial structure. Taken together, these data indicate that BMP7 expression in the epithelial components of the kidney is not dependent on cell-cell or cell-ECM interactions with the metanephric mesenchyme. By contrast, BMP7 expression in the metanephric mesenchyme is dependent on proteoglycans and possibly Wnt signaling.