The nephron is the functional unit that executes the homeostatic roles of the kidney in vertebrates. Critical to this function is the physical arrangement of the glomerular blood filter attached to a tubular epithelium that is subdivided into specialized proximal and distal segments. During embryogenesis, nephron progenitors undergo a mesenchymal-epithelial transition (MET) and adopt different segment-specific cell fates along the proximo-distal axis of the nephron. The molecular basis of how these segments arise remains largely unknown. Recent studies using the zebrafish have identified the Hnf1beta transcription factor (Hnf1b) as a major regulator of tubular segmentation. In Hnf1b-deficient zebrafish embryos, nephron progenitors fail to adopt the proximo-distal segmentation pattern of the nephron, yet still undergo MET. This observation suggests that the functional segmentation of renal tubular epithelial cells is independent of pathways that induce their epithelialization. Here we review this new role of Hnf1b for nephron segmentation during zebrafish and mouse kidney development.