Nephrotic syndrome, a malfunction of the kidney glomerular filter, leads to proteinuria, edema and, in steroid-resistant nephrotic syndrome, end-stage kidney disease. Using positional cloning, we identified mutations in the phospholipase C epsilon gene (PLCE1) as causing early-onset nephrotic syndrome with end-stage kidney disease. Kidney histology of affected individuals showed diffuse mesangial sclerosis (DMS). Using immunofluorescence, we found PLCepsilon1 expression in developing and mature glomerular podocytes and showed that DMS represents an arrest of normal glomerular development. We identified IQ motif-containing GTPase-activating protein 1 as a new interaction partner of PLCepsilon1. Two siblings with a missense mutation in an exon encoding the PLCepsilon1 catalytic domain showed histology characteristic of focal segmental glomerulosclerosis. Notably, two other affected individuals responded to therapy, making this the first report of a molecular cause of nephrotic syndrome that may resolve after therapy. These findings, together with the zebrafish model of human nephrotic syndrome generated by plce1 knockdown, open new inroads into pathophysiology and treatment mechanisms of nephrotic syndrome.