Hepatocyte nuclear factor 1B (HNF1B) encodes a transcription factor expressed in developing human kidney epithelia. Heterozygous HNF1B mutations are the commonest monogenic cause of dysplastic kidney malformations (DKMs). To understand their pathobiology, we generated heterozygous HNF1B mutant kidney organoids from CRISPR-Cas9 gene-edited human ESCs and iPSCs reprogrammed from a family with HNF1B-asscociated DKMs. Mutant organoids contained enlarged malformed tubules and displayed deregulated cell turnover. Numerous genes implicated in Mendelian kidney tubulopathies were downregulated, and mutant tubules resisted the cAMP-mediated dilatation seen in controls. Bioinformatic analyses indicated abnormal WNT, calcium, and glutamatergic pathways, the latter hitherto unstudied in developing kidneys. Glutamate ionotropic receptor kainate type subunit 3 was upregulated in mutant organoids and was detected in their tubules and in fetal human DKM dysplastic epithelia. These results reveal morphological, molecular, and physiological roles for HNF1B in human kidney tubule morphogenesis and functional differentiation. They additionally suggest druggable targets to ameliorate disease.