Aquaporin-3 (AQP3) is a water channel expressed at the basolateral plasma membrane of kidney collecting-duct epithelial cells. The mouse AQP3 cDNA was isolated and encodes a 292-amino acid water/glycerol-transporting glycoprotein expressed in kidney, large airways, eye, urinary bladder, skin, and gastrointestinal tract. The mouse AQP3 gene was analyzed, and AQP3 null mice were generated by targeted gene disruption. The growth and phenotype of AQP3 null mice were grossly normal except for polyuria. AQP3 deletion had little effect on AQP1 or AQP4 protein expression but decreased AQP2 protein expression particularly in renal cortex. Fluid consumption in AQP3 null mice was more than 10-fold greater than that in wild-type litter mates, and urine osmolality (<275 milliosmol) was much lower than in wild-type mice (>1,200 milliosmol). After 1-desamino-8-d-arginine-vasopressin administration or water deprivation, the AQP3 null mice were able to concentrate their urine partially to approximately 30% of that in wild-type mice. Osmotic water permeability of cortical collecting-duct basolateral membrane, measured by a spatial filtering optics method, was >3-fold reduced by AQP3 deletion. To test the hypothesis that the residual concentrating ability of AQP3 null mice was due to the inner medullary collecting-duct water channel AQP4, AQP3/AQP4 double-knockout mice were generated. The double-knockout mice had greater impairment of urinary-concentrating ability than did the AQP3 single-knockout mice. Our findings establish a form of nephrogenic diabetes insipidus produced by impaired water permeability in collecting-duct basolateral membrane. Basolateral membrane aquaporins may thus provide blood-accessible targets for drug discovery of aquaretic inhibitors.