The inner medullary collecting duct (IMCD) is widely viewed as a single renal tubule segment with homogeneous properties. However, recent morphological and functional studies have raised the possibility that the initial and terminal parts of the IMCD may differ. To test this possibility further and to localize sites of action of arginine vasopressin (AVP) along the IMCD, we measured osmotic water permeability (Pf) and urea permeability (Purea) in isolated perfused rat IMCDs. In the initial third of the IMCD, 10 nM AVP increased Pf from 16 +/- 8 to 148 +/- 50 micron/s. The terminal two-thirds of the IMCD had a significantly higher basal Pf (70 +/- 12 micron/s), which increased to 186 +/- 25 micron/s with AVP. The initial IMCD had a relatively low basal Purea (3 +/- 1 X 10(-5) cm/s), which did not change with AVP. The terminal IMCD had a significantly higher basal Purea (17 +/- 4 X 10(-5) cm/s), which increased to a very high value (69 +/- 15 X 10(-5) cm/s) with AVP. The results support the premise that (from the point of view of vasopressin effects on water and urea transport) there are two functionally distinct parts of the inner medullary collecting duct: an initial part that resembles the cortical or outer medullary portions of the mammalian collecting duct and a terminal part that resembles the toad urinary bladder. The significance of these findings for the urinary concentrating mechanism is discussed.