We have identified a new insertional mutation in the mouse (TgN737Rpw) that causes a phenotype that closely resembles human autosomal recessive polycystic kidney disease. The renal pathology in these mutants first presents itself as a dilation of the proximal tubules, which is quickly followed by the development of cystic lesions in the collecting ducts. The livers in the mutant animals develop a variable lesion depending upon the genetic background. We have cloned the mutant locus and have isolated and characterized a gene, Tg737, whose expression is disrupted in the mutant animals. Expression of the Tg737 gene can normally be detected using the Northern blot analysis at low levels in a variety of tissues, including the kidney and liver. Using the in situ hybridization procedure, expression of the Tg737 mRNA can be detected in the collecting ducts of adult kidneys and in portions of the embryonic day 15.5 kidney. Most important, we have corrected the defective kidney trait by expressing the wild-type cDNA as a transgene in the mutant animals. The human homologue of the Tg737 gene has also been cloned and mapped to human chromosome 13.