Prostaglandin E(2) (PGE(2)) antagonizes the action of arginine vasopressin (AVP) on collecting duct water permeability. To investigate the mechanism of this antagonism, rat renal inner medulla (IM) was incubated with the two hormones, and the phosphorylation and subcellular distribution of the water channel, aquaporin-2 (AQP2) were studied. Using a phosphorylation state-specific AQP2 antibody, we demonstrated that AVP stimulates AQP2 phosphorylation at the Ser(256) protein kinase A consensus site in a time- and dose-dependent manner. In parallel studies using a differential centrifugation technique, we demonstrated that AVP induced translocation of AQP2 from an intracellular vesicle-enriched fraction to a plasma membrane-enriched fraction. PGE(2) (10(-7) M) added after AVP (10(-8) M) did not decrease AQP2 phosphorylation but reversed AVP-induced translocation of AQP2 to the plasma membrane. Preincubation of IM with PGE(2) did not prevent the effects of AVP on AQP2 phosphorylation and trafficking. PGE(2) alone did not influence AQP2 phosphorylation and subcellular distribution. Our data indicate that 1) recruitment of AQP2 to the plasma membrane and its retrieval to a pool of intracellular vesicles may be regulated independently, 2) PGE(2) may counteract AVP action by activation of AQP2 retrieval, 3) dephosphorylation of AQP2 is not a prerequisite for its internalization.