Regulation of cell volume is essential for every cell and is accomplished by the regulated loss or gain of intracellular ions or other osmolytes. Regulatory volume decrease often involves the parallel activation of potassium and chloride channels. Overexpression of P-glycoprotein leads to volume-activated Cl- currents but its physiological importance for volume regulation is unclear. CIC-2 is a ubiquitously expressed Cl- channel activatable by non-physiologically strong hyperpolarization. We now show that CIC-2 can be activated by extracellular hypotonicity, which suggests that it has a widespread role in volume regulation. Domains necessary for activation by both voltage and volume are localized to the amino terminus. Mutations in an 'essential' region lead to constitutively open channels unresponsive to medium tonicity, whereas deletions in a 'modulating' region produce partially opened channels responsive to both hypo- and hypertonicity. These domains can be transplanted to different regions of the protein without loss of function.