The urothelium of the bladder functions as a waterproof barrier between tissue and outflowing urine. Largely quiescent during homeostasis, this unique epithelium rapidly regenerates in response to bacterial or chemical injury. The specification of the proper cell types during development and injury repair is crucial for tissue function. This Review surveys the current understanding of urothelial progenitor populations in the contexts of organogenesis, regeneration and tumorigenesis. Furthermore, we discuss pathways and signaling mechanisms involved in urothelial differentiation, and consider the relevance of this knowledge to stem cell biology and tissue regeneration.