Nephrogenic diabetes insipidus (NDI) is characterized by resistance of the kidneys to the action of arginine vasopressin (AVP); X-linked recessive NDI is caused by an inactivating mutation of the vasopressin type-2 (V2) receptor. Several missense mutations in the first or second extracellular loop of the V2 receptor have been reported, and some of these mutant receptors were confirmed to have reduced affinities for ligand binding. We detected a novel V2 receptor gene mutation, a substitution of cysteine for arginine-104 (R104C) located in the first extracellular loop of the V2 receptor, in a patient with congenital NDI. Functional analysis by transient expression studies with COS-7 cells showed binding capacity of R104C mutant diminished as 10% of wild type, but binding affinity was strong rather than wild type. In the result of AVP stimulation studies, maximum cAMP accumulation of R104C decreased as 50% of wild type. On the other hand, a designed mutant receptor, substituted serine for arginine-104 as a model of modified R104C mutant receptor removed the influence of the sulfhydryl group in cysteine-104, recovered binding capacity up to 50% of wild type and maximum cAMP accumulation as 82% of wild type. Our study demonstrated that the R104C mutation of the V2 receptor was a cause of NDI. The mechanism of renal resistance to AVP was the reduction of ligand binding, and adenylyl cyclase activation depended on the V2 receptor. In addition, we confirmed that the sulfhydryl group of the cysteine-104 caused most part of R104C mutant receptor dysfunction.