Loss-of-function mutations of the type 2 vasopressin receptor (V2R) in kidney can lead to nephrogenic diabetes insipidus (NDI). We studied a previously described, but uncharacterized, mutation of the V2R (N321K missense mutation) of a patient with NDI. The properties of the mutant receptor were evaluated. We constructed a highly sensitive Epac-based bioluminescence resonance energy transfer biosensor to perform real-time cAMP measurements after agonist stimulation of transiently transfected HEK293 cells with V2Rs. β-Arrestin binding of the activated receptors was examined with luciferase-tagged β-arrestin and mVenus-tagged V2Rs using the bioluminescence resonance energy transfer technique. Cell surface expression levels of hemagglutinin-tagged receptors were determined with flow cytometry using anti-hemagglutinin-Alexa 488 antibodies. Cellular localization examinations were implemented with fluorescent tagged receptors visualized with confocal laser scanning microscopy. The effect of various vasopressin analogs on the type 1 vasopressin receptor (V1R) was tested on mouse arteries by wire myography. The N321K mutant V2R showed normal cell surface expression, but the potency of arginine vasopressin for cAMP generation was low, whereas the clinically used desmopressin was not efficient. The β-arrestin binding and internalization properties of the mutant receptor were also different than those for the wild type. The function of the mutant receptor can be rescued with administration of the V2R agonist Val(4)-desmopressin, which had no detectable side effects on V1R in the effective cAMP generating concentrations. Based on these findings we propose a therapeutic strategy for patients with NDI carrying the N321K mutation, as our in vivo experiments suggest that Val(4)-desmopressin could rescue the function of the N321K-V2R without significant side effects on the V1R.