Familial neurohypophyseal diabetes insipidus is an autosomal dominant disorder characterized by post-natal development of arginine vasopressin (AVP) deficiency due to mutations in the AVP gene. All published mutations affect the signal peptide or the neurophysin-II carrier protein and are presumed to interfere with processing of the preprohormone, leading to neuronal damage. We studied an unusual Palestinian family consisting of asymptomatic first cousin parents and three children affected with neurohypophyseal diabetes insipidus, suggesting autosomal recessive inheritance. All three affected children were homozygous and the parents heterozygous for a single novel mutation (C301->T) in exon 1, replacing Pro7 of mature AVP with Leu (Leu-AVP). Leu-AVP was a weak agonist with approximately 30-fold reduced binding to the human V2 receptor. Measured by radioimmunoassay with a synthetic Leu-AVP standard, serum Leu-AVP levels were elevated in all three children and further increased during water deprivation to as high as 30 times normal. The youngest child (2 years old) was only mildly affected but had Leu-AVP levels similar to her severely affected 8-year-old brother, suggesting that unknown mechanisms may partially compensate for a deficiency of active AVP in very young children.