CLC-K1 is a kidney-specific chloride channel that mediates transepithelial chloride transport in the thin ascending limb of Henle's loop (tAL) in the inner medulla. Transport of NaCl in the tAL is thought to be a component of urinary concentration in a passive model of the countercurrent multiplication system, but there has been no direct evidence that CLC-K1 is involved in urine concentration. To analyse the physiological function of CLC-K1 in vivo, we generated mice lacking CLC-K1 by targeted gene disruption. Clcnk1-/- mice were physically normal appearance, but produced approximately five times more urine than Clcnk1+/- and Clcnk1+/+ mice. After 24 hours of water deprivation, Clcnk1-/- mice were severely dehydrated and lethargic, with a decrease of approximately 27% in body weight. Intraperitoneal injection of the V2 agonist 1-deamino-8-D-arginine vasopressin (dDAVP) induced a threefold increase in urine osmolarity in Clcnk1+/- and Clcnk1+/+ mice, whereas only a minimal increase was seen in Clcnk1-/- mice, indicating nephrogenic diabetes insipidus. After in vitro perfusion of the tAL, the lumen-to-bath chloride gradient did not produce a diffusion potential in Clcnk1-/- mice in contrast to Clcnk1+/+ and Clcnk1+/- mice. These results establish that CLC-K1 has a role in urine concentration, and that the countercurrent system in the inner medulla is involved in the generation and maintenance of hypertonic medullary interstitium.