Currently, there is little understanding of what factors regulate the development of urine concentrating capability in normal or polycystic kidney. The present study examined the developmental expression of genes associated with urine concentration in developing mice, including C57BL/6J-cpk/cpk mice with autosomal recessive-infantile (AR) polycystic kidney disease (PKD). Concentration of urine requires: 1) medullary collecting ducts (CD) located within a hypertonic interstitium, 2) CD cell expression of functional arginine vasopressin V2 receptors (AVP-V2R), and 3) the presence of appropriate CD water channels (aquaporins, AQP 2 and 3). An increase in urine osmolarity, normally seen between 1 and 3 weeks of age, was absent in cpk cystic mice. Aldose reductase mRNA expression (a gene upregulated by medullary hyperosmolarity) increased in normal mice, but remained low in the cystic kidney, suggesting the absence of a hypertonic medullary interstitium. AVP-V2R, AQP2, and AQP3 mRNA expression normally increase between 7 and 14 days. However, all were dramatically overexpressed even at 7 days of age in the cpk kidney in vivo, but decreased in vitro. Activation of the AVP-V2 receptor stimulates the production of cAMP, a substance known to promote cyst enlargement. To determine if CD cAMP, generated from increased AVP-V2Rs, was accelerating the PKD, cystic mice and their normal littermates were treated with OPC31260, a relatively specific AVP-V2R antagonist. OPC31260 treatment of cystic mice led to an amelioration of the cystic enlargement and azotemia. Treatment also decreased renal AQP2 mRNA but increased AVP-V2R and AQP3 mRNA expression in vivo. AVP upregulates the expression of AVP-V2R, AQP2, and AQP3 mRNAs in vitro. Renal EGF, known to inhibit AVP-V2R activity, downregulates AVP-V2R mRNA in vitro. Brief in vivo EGF treatment, known to decrease PKD in cpk mice, led to increased expression of AVP-V2R, AQP2, and AQP3 mRNAs at 2 weeks in both normal and cystic mice but no change was evident at 3 weeks of age. In conclusion, the development of urinary concentration ability correlates with the development of an increased medullary osmotic gradient which is diminished in murine ARPKD. However, CD genes associated with this process are overexpressed in vivo but underexpressed in vitro in the cystic kidney. The overexpression and/or overactivity of the AVP-V2R appears to contribute to the progression of PKD since an AVP-V2R antagonist inhibits cystic renal enlargement in the cpk mouse.