Nephrogenic diabetes insipidus is a rare genetic disorder characterized by insensitivity of the distal nephron to the antidiuretic effect of arginine vasopressin. Two different molecular defects underlying this disease have so far been identified. Mutations in the gene encoding the vasopressin type-2 receptor cause the X-chromosomal form of the disease, whereas mutations in the gene encoding the vasopressin-dependent water channel aquaporin-2 are responsible for the autosomal recessive, and (in some cases) an autosomal dominant type of the disease. Functional analysis of naturally occurring mutations in the vasopressin type-2 receptor and aquaporin-2 have increased the insight into the structure and function of both proteins and have led to substantial progress in understanding the cellular mechanisms underlying the concentrating ability of the kidney. Some female carriers of a vasopressin type-2 receptor mutation may show complete manifestation of nephrogenic diabetes insipidus, probably as a result of skewed X-inactivation. The recent findings in nephrogenic diabetes insipidus research have considerable impact for diagnosis of and genetic counselling for this disease.