We investigated immunohistochemical localization of V2 vasopressin receptor along the nephron using a specific polyclonal antibody. Staining was observed in some of thick ascending limbs and all of principal and inner medullary collecting duct (IMCD) cells. Not only basolateral but also luminal membrane was stained in collecting ducts, especially in terminal IMCD (tIMCD). To learn the functional role of luminal V2 receptor in tIMCD, we studied the luminal effects of arginine vasopressin (AVP) on osmotic water permeability (Pf), urea permeability (Pu), and cAMP accumulation using isolated perfused rat tIMCD. In the absence of bath AVP, luminal AVP caused a small increase in cAMP accumulation, Pf and Pu, confirming the presence of V2 receptor in the lumen of tIMCD. In contrast, luminal AVP inhibited Pf and Pu by 30-65% in the presence of bath AVP by decreasing cAMP accumulation via V1a or oxytocin receptors and by an unknown mechanism via V2 receptors in the luminal membrane of tIMCD. These data show that V2 receptors are localized not only in the basolateral membrane but also in the luminal membrane of the distal nephron. Luminal AVP acts as a negative feedback system upon the basolateral action of AVP in tIMCD.