In the kidney, the actions of the antidiuretic hormone arginine vasopressin (AVP) renders the collecting duct highly permeable to water. This large increase in water permeability is largely due to the translocation of the water channel aquaporin-2 (AQP-2) from intracellular storage vesicles to the apical plasma membrane of collecting duct principal cells. The focus of this chapter is on the recent advances in interpreting the complex mechanism that causes regulated exocytosis of AQP-2 to the apical plasma membrane, its regulated endocytosis and the recycling of AQP-2. Determining how AQP-2 trafficking occurs at the molecular level is fundamental to understanding the physiology of water balance regulation and the pathophysiology of water balance disorders.