The Wilms' tumor 1 gene (WT1) has been identified as a tumor suppressor gene involved in the etiology of Wilms' tumor. Approximately 10 % of all Wilms' tumors carry mutations in the WT1 gene. Alterations in the WT1 gene have also been observed in other tumor types, such as leukemia, mesothelioma and desmoplastic small round cell tumor. Dependent on the tumor type, WT1 proteins might either function as tumor suppressor proteins or as survival factors. Mutations in the WT1 gene can also result in congenital abnormalities as observed in Denys–Drash and Frasier syndrome patients. Mouse models have proven the critical importance of WT1 expression for the development of several organs, including the kidneys, the gonads and the spleen. The WT1 proteins seem to perform two main functions. They regulate the transcription of a variety of target genes and may be involved in post-transcriptional processing of RNA. The WT1 gene encodes at least 24 protein forms. These isoforms have partially distinct biological functions and effects, which in many cases are also specific for the model system in which WT1 is studied. This review discusses the molecular mechanisms by which the various WT1 isoforms exert their functions in normal development and how alterations in WT1 may lead to developmental abnormalities and tumor growth.