Mutations in PKD1 cause dominant polycystic kidney disease (PKD), characterized by large fluid-filled kidney cysts in adult life, but the molecular mechanism of cystogenesis remains obscure. Ostrom et al. [Dev. Biol., 219, 250-258 (2000)] showed that reduced dosage of Pax2 caused increased apoptosis, and ameliorated cystogenesis in Cpk mutant mice with recessive PKD. Pax2 is expressed in condensing metanephrogenic mesenchyme and arborizing ureteric bud, and plays an important role in kidney development. Transient Pax2 expression during fetal kidney mesenchyme-to-epithelial transition, as well as in nascent tubules, is followed by marked down-regulation of Pax2 expression. Here, we show that in humans with PKD, as well as in Pkd1(del34/del34) mutant mice, Pax2 was expressed in cyst epithelial cells, and facilitated cyst growth in Pkd1(del34/del34) mutant mice. In Pkd1(del34/del34) mutant kidneys, the expression of Pax2 persisted in nascent collecting ducts. In contrast, homozygous Pkd1(del34/del34) fetal mice carrying mutant Pax2 exhibited ameliorated cyst growth, although reduced cystogenesis was not associated with increased apoptosis. Pax2 expression was attenuated in nascent collecting ducts and absent from remnant cysts of Pkd1(del34/del34)/Pax2(1Neu/+) mutant mice. To investigate whether the Pkd1 gene product, Polycystin-1, regulates Pax2, MDCK cells were engineered constitutively expressing wild-type Pkd1; Pax2 protein levels and promoter activity were both repressed in MDCK cells over-expressing Pkd1, but not in cells without transgenic Pkd1. These data suggest that polycystin-1-deficient tubular epithelia persistently express Pax2 in ADPKD, and that Pax2 or its pathway may be an appropriate target for the development of novel therapies for ADPKD.