The recent identification of aquaporin water channel proteins has provided detailed information about the molecular basis for transepithelial water transport. At least five aquaporins have been identified in the kidney; they have provided detailed molecular insight into the fundamental physiology of water balance. This article focuses primarily on the physiology and pathophysiologic significance of the vasopressin-regulated water channel aquaporin-2 (AQP2) in a number of conditions where body water balance is disturbed. AQP2 is regulated by vasopressin by both short- and long-term mechanisms. Acutely, vasopressin induces exocytic insertion of AQP2 into the apical plasma membrane to increase collecting duct water reabsorption. Moreover, long-term regulation of body water balance is achieved by changes in total collecting duct levels of AQP2. Recent studies have documented that both vasopressin and vasopressin-independent regulation play important roles in this. In conditions with acquired nephrogenic diabetes insipidus (eg, lithium treatment, hypokalemia, postobstructive polyuria), AQP2 expression and targeting have been found to be markedly reduced, providing an explanation for the polyuria and the inability to concentrate urine associated with these conditions. Conversely, in conditions with water retention (eg, heart failure, pregnancy), it has been shown that AQP2 levels and plasma membrane targeting are increased. Continued analysis of aquaporins is providing detailed molecular insight into the physiology and pathophysiology of water balance disorders.