Maternal administration of dexamethasone (DEX) for 48 hours early in rat kidney development results in offspring with a reduced nephron endowment. However, the mechanism through which DEX inhibits nephrogenesis is unknown. In this study we hypothesised that DEX may indirectly inhibit nephrogenesis by inhibiting ureteric branching morphogenesis. Whole metanephroi from day 14.5 (E14.5) rat embryos were cultured in the presence of DEX. DEX [10-5M] exposure for 2 days significantly inhibited ureteric branching compared to metanephroi grown in control media or DEX [10-7M]. Culturing metanephroi for a further 3 days (in control media only) reduced total glomerular number in metanephroi previously exposed to DEX [10-5M] or [10-7M] compared to control cultures. Expression of genes known to regulate ureteric branching morphogenesis was determined by real-time PCR in metanephroi after 2 days in culture. DEX exposure in vitro decreased expression of Glial cell line-derived neurotrophic factor (GDNF) and increased expression of Bone morphogenetic protein-4 (BMP-4) and transforming growth factor-1 (TGF-1). Similar gene expression changes were found in E16.5 metanephroi in which the dam had been exposed to 2 days of DEX (0.2 mg/kg/day) at E14.5/15.5 in vivo. However, in kidneys collected at E20.5 after in vivo exposure for 2 days, GDNF expression was increased and BMP-4 and TGF-1 expression decreased suggesting a biphasic response in gene expression to DEX exposure. These results show for the first time that inhibition of ureteric branching morphogenesis may be a key mechanism through which DEX exposure results in a reduced nephron endowment.