Polycystic kidney disease (PKD) is a ciliopathy characterized by renal cysts and hypertension. These changes are presumably due to altered fluid and electrolyte transport in the collecting duct (CD). This is the site where vasopressin (AVP) stimulates vasopressin-2 receptor (V2R)-mediated aquaporin-2 (AQP2) insertion into the apical membrane. Since cysts frequently occur in the CD, we studied V2R and AQP2 trafficking and function in CD cell lines with stunted and normal cilia [cilia (-), cilia (+)] derived from the orpk mouse (hypomorph of the Tg737/Ift88 gene). Interestingly, only cilia (-) cells grown on culture dishes formed domes after apical AVP treatment. This observation led to our hypothesis that V2R mislocalizes to the apical membrane in the absence of a full-length cilium. Immunofluorescence indicated that AQP2 localizes to cilia and in a subapical compartment in cilia (+) cells, but AQP2 levels were elevated in both apical and basolateral membranes in cilia (-) cells after apical AVP treatment. Western blot analysis revealed V2R and glycosylated AQP2 in biotinylated apical membranes of cilia (-) but not in cilia (+) cells. In addition, apical V2R was functional upon apical desmopressin (DDAVP) treatment by demonstrating increased cAMP, water transport, and benzamil-sensitive equivalent short-circuit current (I(sc)) in cilia (-) cells but not in cilia (+) cells. Moreover, pretreatment with a PKA inhibitor abolished DDAVP stimulation of I(sc) in cilia (-) cells. Thus we propose that structural or functional loss of cilia leads to abnormal trafficking of AQP2/V2R leading to enhanced salt and water absorption. Whether such apical localization contributes to enhanced fluid retention and hypertension in PKD remains to be determined.