Germline mutations in PKD2 cause autosomal dominant polycystic kidney disease. We have introduced a mutant exon 1 in tandem with the wild-type exon 1 at the mouse Pkd2 locus. This is an unstable allele that undergoes somatic inactivation by intragenic homologous recombination to produce a true null allele. Mice heterozygous and homozygous for this mutation, as well as Pkd+/- mice, develop polycystic kidney and liver lesions that are indistinguishable from the human phenotype. In all cases, renal cysts arise from renal tubular cells that lose the capacity to produce Pkd2 protein. Somatic loss of Pkd2 expression is both necessary and sufficient for renal cyst formation in ADPKD, suggesting that PKD2 occurs by a cellular recessive mechanism.