Lithium treatment for 4 wk caused severe polyuria, dramatic downregulation in aquaporin-2 (AQP-2) expression, and marked decrease in AQP-2 immunoreactivity with the appearance of a large number of cells without AQP-2 labeling in the collecting ducts after lithium treatment. Surprisingly, this was not all due to an increase in AQP-2-negative principal cells, because double immunolabeling revealed that the majority of the AQP-2-negative cells displayed [H⁺]ATPase labeling, which identified them as intercalated cells. Moreover, multiple [H⁺]ATPase-labeled cells were adjacent, which was never seen in control rats. Quantitation confirmed a significant decrease in the fraction of collecting duct cells that exhibited detectable AQP-2 labeling compared with control rats: in cortical collecting ducts, 40 ± 3.4 vs. 62 ± 1.8% of controls (P < 0.05; n = 4) and in inner medullary collecting ducts, 58 ± 1.6 vs. 81 ± 1.3% of controls (P < 0.05; n = 4). In parallel, a significant increase in the fraction of intercalated ([H⁺]ATPase-positive) cells was shown. Urine output, whole kidney AQP-2 expression, cellular organization, and the fractions of principal and intercalated cells in cortex and inner medulla returned to control levels after 4 wk on a lithium-free diet following 4 wk on a lithium-containing diet. In conclusion, lithium treatment not only decreased AQP-2 expression, but dramatically and reversibly reduced the fraction of principal cells and altered the cellular organization in collecting ducts. These effects are likely to be important in lithium-induced nephrogenic diabetes insipidus.