Among other defects in water metabolism, adrenal insufficiency is associated with an inability to concentrate urine maximally in both man and experimental animals. Recent studies in the rabbit cortical collecting tubule have suggested indirectly that this defect may result from impaired cyclic AMP (cAMP) formation in response to antidiuretic hormone stimulation. In the present study, we examined key elements of arginine vasopressin (AVP)-dependent cAMP metabolism in the papillary collecting duct (PCD), microdissected from 8-d adrenalectomized (ADX) and sham-operated control rats. AVP-sensitive adenylate cyclase (ADC) activity in PCD did not differ between control and ADX rats. cAMP-phosphodiesterase activity (cAMP-PDIE), measured at 10(-6) M cAMP substrate concentration, was significantly higher (delta + 31.6%) in PCD of ADX rats compared with controls. Incubation of intact PCD from ADX rats with AVP resulted in an accumulation of cAMP (delta - 48.5%) significantly lower than observed in control PCD. Chronic administration of dexamethasone reduced cAMP-PDIE activity in PCD of ADX rats to levels close to or below those observed in control rat PCD, and also resulted in a restoration of AVP-stimulated cAMP accumulation to levels approaching control values. Results indicate that the impaired maximal urinary concentrating ability associated with adrenal insufficiency may be due, at least in part, to a reduced accumulation of cAMP in response to AVP in the PCD. This decreased cAMP accumulation results from increased cAMP-PDIE activity in the PCD of ADX rats and can be corrected by administration of glucocorticoid.