Kidney organogenesis requires the tight control of proliferation, differentiation and apoptosis of renal progenitor cells. How the balance between these cellular decisions is achieved remains elusive. The Wilms' tumour suppressor Wt1 is required for progenitor survival, but the molecular cause for renal agenesis in mutants is poorly understood. Here we demonstrate that lack of Wt1 abolishes fibroblast growth factor (FGF) and induces BMP/pSMAD signalling within the metanephric mesenchyme. Addition of recombinant FGFs or inhibition of pSMAD signalling rescues progenitor cell apoptosis induced by the loss of Wt1. We further show that recombinant BMP4, but not BMP7, induces an apoptotic response within the early kidney that can be suppressed by simultaneous addition of FGFs. These data reveal a hitherto unknown sensitivity of early renal progenitors to pSMAD signalling, establishes FGF and pSMAD signalling as antagonistic forces in early kidney development and places WT1 as a key regulator of pro-survival FGF signalling pathway genes.