Polycystic kidney (PCK) rats are a spontaneous model of autosomal recessive polycystic kidney disease that exhibit cholangiocyte-derived liver cysts. We have previously reported that in normal cholangiocytes a subset of vesicles contain three proteins (ie, the water channel AQP1, the chloride channel CFTR, and the anion exchanger AE2) that account for ion-driven water transport. Thus, we hypothesized that altered expression and location of these functionally related proteins contribute to hepatic cystogenesis. We show here that under basal conditions and in response to secretin and hypotonicity, cysts from PCK rats expanded to a greater degree than cysts formed by normal bile ducts. Quantitative reverse transcriptase-polymerase chain reaction, immunoblot analysis, and confocal and immunoelectron microscopy all indicated increased expression of these three proteins in PCK cholangiocytes versus normal cholangiocytes. AQP1, CFTR, and AE2 were localized preferentially to the apical membrane in normal rats while overexpressed at the basolateral membrane in PCK rats. Exposure of the cholangiocyte basolateral membrane to CFTR inhibitors [5-nitro-2-(3-phenylpropylamino)-benzoic acid and CFTRinh172], or Cl(-)/HCO(3)(-) exchange inhibitors (4,4'-diisothiocyanatostilbene-2,2'-disulfonic acid disodium salt hydrate and 4-acetamido-4'-isothiocyanato-2,2'-stilbenedisulfonic acid disodium salt hydrate) blocked secretin-stimulated fluid accumulation in PCK but not in normal cysts. Our data suggest that hepatic cystogenesis in autosomal recessive polycystic kidney disease may involve increased fluid accumulation because of overexpression and abnormal location of AQP1, CFTR, and AE2 in cystic cholangiocytes. Therapeutic interventions that block the activation of these proteins might inhibit cyst expansion in polycystic liver disease.