The mammalian kidney and male reproductive system are both derived from the intermediate mesoderm. The spatial and temporal expression of bone morphogenetic protein (BMP) 2 and BMP4 and their cognate receptor, activin like kinase 3 (ALK3), suggests a functional role for BMP-ALK3 signaling during formation of intermediate mesoderm-derivative organs. Here, we define cell autonomous functions for Alk3 in the kidney and male gonad in mice with CRE-mediated Alk3 inactivation targeted to intermediate mesoderm progenitors (Alk3(IMP null)). Alk3-deficient mice exhibit simple renal hypoplasia characterized by decreases in both kidney size and nephron number but normal tissue architecture. These defects are preceded by a decreased contribution of Alk3-deleted cells to the metanephric blastema and reduced expression of Osr1 and SIX2, which mark nephron progenitor cells. Mutant mice are also characterized by defects in intermediate mesoderm-derived genital tissues with fewer mesonephric tubules and testicular Leydig cells, epithelial vacuolization in the postnatal corpus epididymis, and decreased serum testosterone levels and reduced fertility. Analysis of ALK3-dependent signaling effectors revealed lineage-specific reduction of phospho-p38 MAPK in metanephric mesenchyme and phospho-SMAD1/5/8 in the testis. Together, these results demonstrate a requirement for Alk3 in distinct progenitor cell populations derived from the intermediate mesoderm.