The developmental mechanisms that orchestrate differentiation of specific nephron segments are incompletely understood, and the factors that maintain their terminal differentiation after nephrogenesis remain largely unknown. Here, the transcription factor AP-2β is shown to be required for the differentiation of distal tubule precursors into early stage distal convoluted tubules (DCTs) during nephrogenesis. In contrast, its downstream target KCTD1 is essential for terminal differentiation of early stage DCTs into mature DCTs, and impairment of their terminal differentiation owing to lack of KCTD1 leads to a severe salt-losing tubulopathy. Moreover, sustained KCTD1 activity in the adult maintains mature DCTs in this terminally differentiated state and prevents renal fibrosis by repressing β-catenin activity, whereas KCTD1 deficiency leads to severe renal fibrosis. Thus, the AP-2β/KCTD1 axis links a developmental pathway in the nephron to the induction and maintenance of terminal differentiation of DCTs that actively prevents their de-differentiation in the adult and protects against renal fibrosis.