Mutations in genes that disrupt centrosome structure or function can cause congenital kidney developmental defects and lead to fibrocystic pathologies. Yet, it is unclear how defective centrosome biogenesis impacts renal progenitor cell physiology. Here, we examined the consequences of impaired centrosome duplication on kidney stromal progenitor cell growth, differentiation, and fate. Conditional deletion of the ciliopathy gene Cep120, which is essential for centrosome duplication, in the stromal mesenchyme resulted in reduced abundance of interstitial lineages including pericytes, fibroblasts and mesangial cells. These phenotypes were caused by a combination of delayed mitosis, activation of the mitotic surveillance pathway leading to apoptosis, and changes in both Wnt and Hedgehog signaling that are key for differentiation of stromal cells. Cep120 ablation resulted in small hypoplastic kidneys with medullary atrophy and delayed nephron maturation. Finally, Cep120 and centrosome loss in the interstitium sensitized kidneys of adult mice, causing rapid fibrosis after renal injury via enhanced TGF-β/Smad3-Gli2 signaling. Our study defines the cellular and developmental defects caused by loss of Cep120 and aberrant centrosome biogenesis in the embryonic kidney stroma.