Osmoreceptors regulate sodium and water balance in a manner that maintains the osmotic pressure of the extracellular fluid (ECF) near an ideal set point. In rats, the concerted release of oxytocin and vasopressin, which is determined by the firing rate of magnocellular neurosecretory cells (MNCs), plays a key role in osmoregulation through the effects of natriuresis and diuresis. Changes in excitatory synaptic drive, derived from osmosensitive neurons in the organum vasculosum lamina terminalis (OVLT), combine with endogenously generated osmoreceptor potentials to modulate the firing rate of MNCs. The cellular basis for osmoreceptor potentials has been characterized using patch-clamp recordings and morphometric analysis in MNCs isolated from the supraoptic nucleus of the adult rat. In these cells, stretch-inactivated cationic channels transduce osmotically evoked changes in cell volume into functionally relevant changes in membrane potential. The experimental details of these mechanisms are reviewed in their physiological context.