Expansion of interstitial cells in the adult kidney is a hallmark of chronic disease, whereas their proliferation during fetal development is necessary for organ formation. An intriguing difference between adult and neonatal kidneys is that the neonatal kidney has the capacity to control interstitial cell proliferation when the target number has been reached. In this study, we define the consequences of inactivating the TGFβ/Smad response in the mouse interstitial cell lineage. We find that pathway inactivation through loss of Smad4 leads to overproliferation of interstitial cells regionally in the kidney medulla. Analysis of markers for BMP and TGFβ pathway activation reveals that loss of Smad4 primarily reduces TGFβ signaling in the interstitium. Whereas TGFβ signaling is reduced in these cells, marker analysis shows that Wnt/β-catenin signaling is increased. Our analysis supports a model in which Wnt/β-catenin-mediated proliferation is attenuated by TGFβ/Smad to ensure that proliferation ceases when the target number of interstitial cells has been reached in the neonatal medulla.