Genetic studies in mice and humans have established an essential role for the Pax2 gene in the development of epithelial structures, including the kidneys, ureters, female uterus, and male ejaculatory ducts. Furthermore, the Pax2 protein is overexpresed in a variety of disease states, including renal cell carcinoma, polycystic kidney disease, Wilms' tumor, and prostate carcinoma. Pax proteins bind DNA and are thought to specify cell fate or cell lineages such that specific structures develop in response to inductive cues and positional information. Pax2 is essential for mediating the inductive signals that generate the renal epithelia. Such inductive signals can phosphorylate the Pax2 protein and promote transcriptional activation of Pax2 response elements. In the kidney, Pax2 is likely to regulate hundreds of loci that respond to inductive signaling and as such sits near the top of a genetic network that specifies the nephrons, collecting ducts, and ureters. Recent data from the PI's lab demonstrates that Pax2 interacts with cellular complexes to modify chromatin by histone methylation. These changes in histone methylation are inherited epigenetic marks that can alter chromatin structure and provide intrinsic cellular memory such that the fate of progenitor cells becomes fixed. The types of histone methylation and subsequent transcriptional activation or transcriptional repression are likely dependent upon the protein complexes that Pax2 interacts with. This application represents the first resubmission of an R01 application aimed at studying the hypothesis that repression of Pax2 dependent target genes by a Groucho4 protein complex requires dephosphorylation of Pax2 and modification of local chromatin structure with marks consistent with gene silencing. To develop and test this hypothesis, we propose the following specific aims: 1. Investigate the molecular mechanism by which Grg4 associated PPM1B attenuates Pax2 dependent gene transcription. 2. Investigate the molecular mechanism by which Grg4 associated PRMT5 attenuates Pax2 dependent gene transcription. 3. Identify candidate Pax2 dependent genes that are modulated by Grg4. 4. Examine the phenotype of Grg4 and associated proteins over-expression/knockdown in organ culture.