We studied the relationship between proliferation, differentiation, and the expression of high-mobility-group protein 17 (HMG-17) during metanephric kidney development. Proliferating cells were found homogenously throughout the early kidney rudiment. The expression pattern of HMG-17 mRNA, on the other hand, was distinctly uneven: In the undifferentiated mesenchyme, the cells in the cranial "tail" part of the mesenchyme showed only a weak signal, whereas a group of cells lying close to the tip of the ureteric bud showed strong HMG-17 expression. The region distinctly positive for HMG-17 is known to contain the first cells to undergo mesenchyme-to-epithelium transition. Using the transfilter model system, strong expression of HMG-17 mRNA, followed by mesenchyme-to-epithelium transition, could be induced also in the "tail" part of the mesenchyme. The upregulation of HMG-17 in the metanephrogenic mesenchyme thus results from interaction with an inductor tissue. Throughout the renal development, the HMG-17 mRNA was also abundant in those epithelial and mesenchymal cells that were undergoing active cell differentiation, and the transcript was downregulated in mature cells. HMG-17 expression thus correlated with the processes of induction and differentiation rather than with proliferation. The present results suggest that HMG-17 could have a role in the activation of the genes regulating kidney organogenesis.