Exosomes are vesicles released following fusion of endosomes with the plasma membrane. Urine contains exosomes that are released from the entire length of the nephron and change in composition with kidney disease. Exosomes can shuttle information between non-renal cells via transfer of protein and RNA. In this study murine kidney collecting duct (mCCDC11) cells were used to demonstrate that exosomes can act as a signalling mechanism between cells. First, the release of exosomes by mCCDC11 cells was confirmed by multiple approaches. Following isopynic centrifugation, exosomal proteins flotillin-1 and TSG101 were identified in fractions consistent with exosomes. Electron microscopy demonstrated structures consistent in size and shape with exosomes. Exposure of mCCDC11 cells to the synthetic vasopressin analogue, desmopressin, did not affect exosomal flotillin-1 or TSG101 but increased aquaporin 2 (AQP2) in a dose- and time-dependent manner that was highly correlated with cellular AQP2 (exosomal AQP2 vs. cellular AQP2, Pearson correlation coefficient r = 0.93). To test whether the ratio of exosomal AQP2/flotillin-1 is under physiological control in vivo, rats were treated with desmopressin. The ratio of AQP2/flotillin-1 in the urinary exosome was significantly increased. Inter-cellular signalling by exosomes was demonstrated: exosomes from desmopressin-treated cells stimulated both AQP2 expression and water transport in untreated mCCDc11 cells (water flow across cells: control exosome treatment 52.8 ± 11 μl cm(-2); AQP2-containing exosomes 77.4 ± 4 μl cm(-2), P = 0.05, n = 4). In summary, the amount of AQP2 in exosomes released from collecting duct cells is physiologically regulated and exosomal AQP2 closely reflects cellular expression. Exosomes can transfer functional AQP2 between cells and this represents a novel physiological mechanism for cell-to-cell communication within the kidney.