Our understanding of urinary concentrating and diluting mechanisms at the end of the 20th century was based largely on data from renal micropuncture studies, isolated perfused tubule studies, tissue analysis studies and anatomical studies, combined with mathematical modeling. Despite extensive data, several key questions remained to be answered. With the advent of the 21st century, a new approach, transgenic and knockout mouse technology, is providing critical new information about urinary concentrating processes. The central goal of this review is to summarize findings in transgenic and knockout mice pertinent to our understanding of the urinary concentrating mechanism, focusing chiefly on mice in which expression of specific renal transporters or receptors has been deleted. These include the major renal water channels (aquaporins), urea transporters, ion transporters and channels (NHE3, NKCC2, NCC, ENaC, ROMK, ClC-K1), G protein-coupled receptors (type 2 vasopressin receptor, prostaglandin receptors, endothelin receptors, angiotensin II receptors), and signaling molecules. These studies shed new light on several key questions concerning the urinary concentrating mechanism including: 1) elucidation of the role of water absorption from the descending limb of Henle in countercurrent multiplication, 2) an evaluation of the feasibility of the passive model of Kokko-Rector and Stephenson, 3) explication of the role of inner medullary collecting duct urea transport in water conservation, 4) an evaluation of the role of tubuloglomerular feedback in maintenance of appropriate distal delivery rates for effective regulation of urinary water excretion, and 5) elucidation of the importance of water reabsorption in the connecting tubule versus the collecting duct for maintenance of water balance.