Targeted disruption of genes encoding components of the renin-angiotensin-aldosterone system leads to abnormal kidney development in the postnatal period characterized by medullary injury, arteriolopathy, fewer glomeruli and loss of urine concentrating ability. The role of adrenal steroids and aldosterone in particular for these observations is not clear. We have addressed the role of adrenal steroids for normal kidney development by investigating adrenalectomized rat pups. Intrarenal and circulating renin and angiotensin II are elevated in the postnatal period while plasma aldosterone is stable at an adult level. Corticosterone is markedly suppressed. At weaning, plasma corticosterone and urine concentrating ability rises sharply. Administration of glucocorticoid at the endogenous nadir accelerates development of urine concentrating ability and increases abundance of NaCl transport molecules in the loop of Henle but lowers cell proliferation and outer medullary growth. Adrenalectomy at postnatal day 10 prevents development of urine concentrating ability, precipitates failure to thrive, dehydration and hydronephrotic medullary injury. Glucocorticoid substitution alone does not re-establish concentrating ability and restore renal development while addition of mineralocorticoid to adrenalectomized rat pups normalizes urine concentrating ability and kidney development. Impaired urinary concentrating ability in mineralocorticoid- deficient rats is caused by excess prostaglandin production mediated by COX-2 and by a shorter cortical papillary axis. We conclude that final stages of kidney development require a low circulating glucocorticoid while aldosterone is necessary for whole body growth, development of urine concentrating ability and development of the renal medulla.