The overall pattern of the developing kidney is set in large part by the developing ureteric bud/collecting duct system, and dysgenesis of this system accounts for a variety of clinically significant renal diseases. Understanding how the behavior of cells in the developing ureteric bud/collecting duct is controlled is therefore important to understanding the normal and abnormal kidney. Dact proteins have recently been identified as cytoplasmic regulators of intracellular signaling. Dact1 inhibits Wnt signaling, and Dact2 inhibits transforming growth factor (TGF)-β signaling. Here, we report that Dact2 is expressed in developing and adult mouse kidneys, specifically in the ureteric bud/collecting duct epithelium, a structure whose morphogenesis is controlled partially by TGF-β. When small interfering RNA is used to knock down Dact2 expression in collecting duct cells, they show some constitutive phospho-Smad2, undetectable in controls, and elevated phospho-Smad2 in response to TGF-β. They also show defective migration and, in a monolayer wound-healing assay, they fail to assemble a leading edge “cable” of actomyosin and advance instead as a disorganized mass of lamellipodium-bearing cells. This effect is seriously exacerbated by exogenous TGF-β, although control cells tolerate it well. In three-dimensional culture, Dact2 knockdown cells form cysts and branching tubules, but the outlines of the cysts made by knockdown cells are ragged rather than smooth and the branching tubules are decorated with many fine spikes not seen in controls. These data suggest Dact2 plays a role in regulating morphogenesis by renal collecting duct cells, probably by protecting cells from overly strong TGF-β pathway activation.