Mutations in the aquaporin-2 (AQP2) water channel gene cause autosomal recessive nephrogenic diabetes insipidus (NDI). Here we report the first patient with an autosomal dominant form of NDI, which is caused by a G866A transition in the AQP2 gene of one allele, resulting in a E258K substitution in the C-tail of AQP2. To define the molecular cause of NDI in this patient, AQP2-E258K was studied in Xenopus oocytes. In contrast to wild-type AQP2, AQP2-E258K conferred a small increase in water permeability, caused by a reduced expression at the plasma membrane. Coexpression of wild-type AQP2 with AQP2-E258K, but not with an AQP2 mutant in recessive NDI (AQP2-R187C), revealed a dominant-negative effect on the water permeability conferred by wild-type AQP2. The physiologically important phosphorylation of S256 by protein kinase A was not affected by the E258K mutation. Immunoblot and microscopic analyses revealed that AQP2-E258K was, in contrast to AQP2 mutants in recessive NDI, not retarded in the endoplasmic reticulum, but retained in the Golgi compartment. Since AQPs are thought to tetramerize, the retention of AQP2-E258K together with wild-type AQP2 in mixed tetramers in the Golgi compartment is a likely explanation for the dominant inheritance of NDI in this patient.