The nephron is a highly specialised segmented structure that provides essential filtration and resorption renal functions. It arises by formation of a polarised renal vesicle that differentiates into a comma-shaped body and then a regionalised S-shaped body (SSB), with the main prospective segments mapped to discrete domains. The regulatory circuits involved in initial nephron patterning are poorly understood. We report here that HNF1B, a transcription factor known to be involved in ureteric bud branching and initiation of nephrogenesis, has an additional role in segment fate acquisition. Hnf1b conditional inactivation in murine nephron progenitors results in rudimentary nephrons comprising a glomerulus connected to the collecting system by a short tubule displaying distal fates. Renal vesicles develop and polarise normally but fail to progress to correctly patterned SSBs. Major defects are evident at late SSBs, with altered morphology, reduction of a proximo-medial subdomain and increased apoptosis. This is preceded by strong downregulation of the Notch pathway components Lfng, Dll1 and Jag1 and the Irx1/2 factors, which are potential regulators of proximal and Henle’s loop segment fates. Moreover, HNF1B is recruited to the regulatory sequences of most of these genes. Overexpression of a HNF1B dominant-negative construct in Xenopus embryos causes downregulation specifically of proximal and intermediate pronephric segment markers. These results show that HNF1B is required for the acquisition of a proximo-intermediate segment fate in vertebrates, thus uncovering a previously unappreciated function of a novel SSB subcompartment in global nephron segmentation and further differentiation.