Hepatocyte nuclear factor-1β (HNF-1β) is a Pit-1, Oct-1/2, Unc-86 (POU) homeodomain-containing transcription factor expressed in the kidney, liver, pancreas, and other epithelial organs. Mutations of HNF-1β cause maturity-onset diabetes of the young, type 5 (MODY5), which is characterized by early-onset diabetes mellitus and congenital malformations of the kidney, pancreas, and genital tract. Knockout of HNF-1β in the mouse kidney results in cyst formation. However, the signaling pathways and transcriptional programs controlled by HNF-1β are poorly understood. Using genome-wide chromatin immunoprecipitation and DNA microarray (ChIP-chip) and microarray analysis of mRNA expression, we identified SOCS3 (suppressor of cytokine signaling-3) as a previously unrecognized target gene of HNF-1β in the kidney. HNF-1β binds to the SOCS3 promoter and represses SOCS3 transcription. The expression of SOCS3 is increased in HNF-1β knockout mice and in renal epithelial cells expressing dominant-negative mutant HNF-1β. Increased levels of SOCS-3 inhibit HGF-induced tubulogenesis by decreasing phosphorylation of Erk and STAT-3. Conversely, knockdown of SOCS-3 in renal epithelial cells expressing dominant-negative mutant HNF-1β rescues the defect in HGF-induced tubulogenesis by restoring phosphorylation of Erk and STAT-3. Thus, HNF-1β regulates tubulogenesis by controlling the levels of SOCS-3 expression. Manipulating the levels of SOCS-3 may be a useful therapeutic approach for human diseases induced by HNF-1β mutations.