Vasopressin-induced water reabsorption coincides with phosphorylation of aquaporin-2 (AQP2) at S256 (pS256), dephosphorylation at S261, and its translocation to the apical membrane, whereas treatment with the phorbol ester 12-tetradecanoylphorbol-13-acetate (TPA) induces AQP2 ubiquitination at K270, its internalization, and lysosomal degradation. In this study we investigated the relationship between S256 and S261 phosphorylation in AQP2 and its ubiquitination and trafficking in MDCK cells. Forskolin stimulation associated with increased pS256 and decreased pS261 AQP2, indicating that MDCK cells are a good model. After forskolin stimulation, TPA-induced ubiquitination of AQP2 preceded phosphorylation of AQP2 at S261, which in the first instance occurred predominantly on ubiquitinated AQP2. Forskolin-induced changes in pS261 were also observed for AQP2-S256A and AQP2-S256D, which constitutively localize in vesicles and the apical membrane, respectively. Although pS261 varies with forskolin as with wild-type AQP2, AQP2-S256A is not increased in its ubiquitination. Our data reveal that pS261 occurred independently of AQP2 localization and suggest that pS261 follows ubiquitination and endocytosis and may stabilize AQP2 ubiquitination and intracellular localization. The absence of increased ubiquitination of AQP2-S256A indicates that its intracellular location is due to the lack of pS256. Furthermore, AQP2-S261A and AQP2-S261D localized to vesicles, which was due to their increased ubiquitination, because changing K270 into Arg in both mutants resulted in their localization in the apical membrane. Although still increased in its ubiquitination, AQP2-S256D-S261D localized in the apical membrane. AQP2-S256D-K270R-Ub, however, localized to intracellular vesicles. Although our localization of AQP2-S261A/D is different from that of others, these data indicate that constitutive S256 phosphorylation counterbalances S261D-induced ubiquitination and internalization or changes its structure to allow distribution to the apical membrane. The vesicular localization of AQP2-S256D-K270R-Ub, however, indicates that the dominant apical sorting of S256D can again be overruled by constitutive ubiquitination. These data indicate that the membrane localization of AQP2 is determined by the balance of the extents of phosphorylation and ubiquitination.