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During renal development, the proper emergence of the ureteric bud (UB) from the Wolffian duct is essential for formation of the urinary system. Previously, we showed that expression of transcription factor GATA-2 in the urogenital primordium was demarcated anteroposteriorly into two domains that were regulated by separate enhancers. While GATA-2 expression in the caudal urogenital mesenchyme is controlled by the UG4 enhancer, its more-rostral expression is regulated by UG2. We found that anteriorly displaced budding led to obstructed megaureters in Gata2 hypomorphic mutant mice, possibly due to reduced expression of the downstream effector bone morphogenetic protein 4 (BMP4). Here, we report that UG4-driven, but not UG2-driven, GATA-2 expression in the urogenital mesenchyme significantly reverts the uropathy observed in the Gata2 hypomorphic mutant mice. Furthermore, the data show that transgenic rescue by GATA-2 reverses the rostral outgrowth of the UB. We also provide evidence for a GATA-2-BMP4 epistatic relationship by demonstrating that reporter gene expression from a Bmp4 bacterial artificial chromosome (BAC) transgene is altered in Gata2 hypomorphs; furthermore, UG4-directed BMP4 expression in the mutants leads to reduced incidence of megaureters. These results demonstrate that GATA-2 expression in the caudal urogenital mesenchyme as directed by the UG4 enhancer is crucial for proper development of the urinary tract and that its regulation of BMP4 expression is a critical aspect of this function.