Vasopressin (AVP)-stimulated translocation and transcription of aquaporin-2 (AQP2) water channels in renal principal cells is essential for urine concentration. Twenty percent of patients treated with lithium develop nephrogenic diabetes insipidus (NDI), a disorder in which the kidney is unable to concentrate urine. In vivo and in mouse collecting duct (mpkCCD) cells, lithium treatment coincides with decreased AQP2 abundance and inactivation of glycogen synthase kinase (Gsk) 3β. This is paralleled in vivo by an increased renal cyclooxygenase 2 (COX-2) expression and urinary prostaglandin PGE(2) excretion. PGE(2) reduces AVP-stimulated water reabsorption, but its precise role in lithium-induced downregulation of AQP2 is unclear. Using mpkCCD cells, we here investigated whether prostaglandins contribute to lithium-induced downregulation of AQP2. In these cells, lithium application reduced AQP2 abundance, which coincided with Gsk3β inactivation and increased COX-2 expression. Inhibition of COX by indomethacin, leading to reduced PGE(2) and PGF(2α) levels, or dexamethasone-induced downregulation of COX-2 both increased AQP2 abundance, while PGE(2) addition reduced AQP2 abundance. However, lithium did not change the prostaglandin levels, and indomethacin and dexamethasone did not prevent lithium-induced AQP2 downregulation. Further analysis revealed that lithium decreased AQP2 protein abundance, mRNA levels and transcription, while PGE(2) reduced AQP2 abundance by increasing its lysosomal degradation, but not by reducing AQP2 gene transcription. In conclusion, our data reveal that in mpkCCD cells, prostaglandins decrease AQP2 protein stability by increasing its lysosomal degradation, indicating that in vivo paracrine-produced prostaglandins might have a role in lithium-induced NDI via this mechanism. However, lithium affects also AQP2 gene transcription, which is prostaglandin independent.