Stromal-epithelial interactions play an important role in renal organogenesis. Expression of the forkhead/winged helix transcription factor FoxD1 (BF-2) is restricted to stromal cells in the embryonic renal cortex, but it mediates its effects on the adjacent ureteric bud and metanephric mesenchyme, which fail to grow and differentiate in BF-2 null mice. BF-2 is therefore likely to regulate transcription of factors secreted by stromal cells that modulate the differentiation of neighboring epithelial cells. Here, we used cells with inducible expression of BF-2, combined with microarray analysis, to identify Placental Growth Factor (PlGF), a Vascular Endothelial Growth Factor (VEGF) family member previously implicated in angiogenesis, as a downstream target of BF-2. BF-2 binds to a conserved HNF3beta site in the PlGF promoter and activates transcription. PlGF is precisely coexpressed with BF-2, both temporally and spatially, within the developing renal stroma, and it is completely absent in BF-2 null kidney stroma. Addition of PlGF to in vitro kidney organ cultures stimulates branching of the ureteric bud. Our observations indicate that PlGF is a direct and physiologically relevant transcriptional target of BF-2. The contribution of PlGF toward stromal signals that regulate epithelial differentiation suggests novel functions for a growth factor previously implicated in reactive angiogenesis.