TonEBP stimulates genes whose products drive cellular accumulation of organic osmolytes and HSP70, which protect cells from the deleterious effects of hypertonicity and urea, respectively. Mice deficient in the TonEBP gene display severe atrophy of the renal medulla because cells failed to adapt to the hyperosmolality. Emerging data suggest that TonEBP plays a key role in the urinary concentrating mechanism by stimulating the UT‐A urea transporters and possibly AQP2 water channel. Thus, TonEBP is an essential regulator in the urinary concentrating mechanism. Studies on structural basis of TonEBP function have revealed the structure of the DNA binding domain, and defined the transactivation domains. Molecular mechanisms underlying the nucleocytoplasmic trafficking, transactivation, and phosphorylation in response to changes in tonicity need to be understood in molecular detail. Such knowledge is needed for the identification of the sensor that detects changes in ambient tonicity and signals to TonEBP.