Congenital obstructive nephropathy (CON) is the most prevalent cause of pediatric chronic kidney disease and end-stage renal disease. The ureteropelvic junction (UPJ) region, where the renal pelvis transitions to the ureter, is the most commonly obstructed site in CON. The underlying causes of congenital UPJ obstructions remain poorly understood, especially when they occur in utero, in part due to the lack of genetic animal models. We previously showed that conditional inactivation of Sec10, a central subunit of the exocyst complex, in the epithelial cells of the ureter and renal collecting system resulted in late gestational bilateral UPJ obstructions with neonatal anuria and death. In this study, we show that without Sec10, the urothelial progenitor cells that line the ureter fail to differentiate into superficial cells, which are responsible for producing uroplakin plaques on the luminal surface. These Sec10-knockout urothelial cells undergo cell death by E17.5 and the urothelial barrier becomes leaky to luminal fluid. Also at E17.5, we measured increased expression of TGFβ1 and genes associated with myofibroblast activation, with evidence of stromal remodeling. Our findings support the model that a defective urothelial barrier allows urine to induce a fibrotic wound healing mechanism, which may contribute to human prenatal UPJ obstructions.