Ectonucleoside triphosphate diphosphohydrolase-1 hydrolyzes extracellular ATP and ADP to AMP. Previously, we showed that CD39 is expressed at several sites within the kidney and thus may impact the availability of type 2 purinergic receptor (P2-R) ligands. Because P2-Rs appear to regulate urinary concentrating ability, we have evaluated renal water handling in transgenic mice (TG) globally overexpressing hCD39. Under basal conditions, TG mice exhibited significantly impaired urinary concentration and decreased protein abundance of AQP2 in the kidney compared with wild-type (WT) mice. Urinary excretion of total nitrates/nitrites was significantly higher in TG mice, but the excretion of AVP or PGE(2) was equivalent to control WT mice. There were no significant differences in electrolyte-free water clearance or fractional excretion of sodium. Under stable hydrated conditions (gelled diet feeding), the differences between the WT and TG mice were negated, but the decrease in urine osmolality persisted. When water deprived, TG mice failed to adequately concentrate urine and exhibited impaired AVP responses. However, the increases in urinary osmolalities in response to subacute dDAVP or chronic AVP treatment were similar in TG and WT mice. These observations suggest that TG mice have impaired urinary concentrating ability despite normal AVP levels. We also note impaired AVP release in response to water deprivation but that TG kidneys are responsive to exogenous dDAVP or AVP. We infer that heightened nucleotide scavenging by increased levels of CD39 altered the release of endogenous AVP in response to dehydration. We propose that ectonucleotidases and modulated purinergic signaling impact urinary concentration and indicate potential utility of targeted therapy for the treatment of water balance disorders.