AQP2 is expressed in the principal cells of the collecting ducts in the kidney and plays a critical role in the urine concentration. A unique feature of AQP2 is that it is stored in the intracellular compartment, and upon stimulation of an antidiuretic hormone (ADH, vasopressin), AQP2 translocates to the apical plasma membrane, where it serves in the uptake of water from the lumen of the collecting duct.

The mutation of AQP2 leads to nephrogenic diabetes insipidus, the inability to concentrate urine. In the recessive nephrogenic diabetes insipidus, mutated AQP2 is retained in the endoplasmic reticulum, whereas in the dominant types, it is localized in the Golgi complex, lysosome, or basolateral plasma membrane.