Chronic fibrosis represents the final common pathway in progressive renal disease. Myofibroblasts deposit the constituents of renal scar, thus crippling renal function. It has recently emerged that an important source of these pivotal effector cells is the injured renal epithelium. This review concentrates on the process of epithelial-mesenchymal transition (EMT) and its regulation. The role of the developmental gene, gremlin, which is reactivated in adult renal disease, is the subject of particular focus. This member of the cysteine knot protein superfamily is critical to the process of nephrogenesis but quiescent in normal adult kidney. There is increasing evidence that gremlin expression reactivates in diabetic nephropathy, and in the diseased fibrotic kidney per se. Known to antagonize members of the bone morphogenic protein (BMP) family, gremlin may also act downstream of TGF-β in induction of EMT. An increased understanding of the extracellular modulation of EMT and, in particular, of the gremlin-BMP axis may result in strategies that can halt or reverse the devastating progression of chronic renal fibrosis.