Recent molecular studies have found striking differences between desert-adapted species and model mammals regarding water conservation. In particular, aquaporin 4, a classical gene involved in water regulation of model species, is absent or not expressed in the kidneys of desert-adapted species. To further understand the molecular response to water availability we studied the Patagonian olive mouse Abrothrix olivacea, a species with an unusually broad ecological tolerance that exhibits a great urine concentration capability. The species is able to occupy both the arid Patagonian steppe and the Valdivian and Magellanic forests. We sampled 95 olive mouse specimens from four localities (two in the steppe, two in the forests) and analyzed both phenotypic variables and transcriptomic data to investigate the response of this species to the contrasting environmental conditions. The relative size of the kidney and the ratio of urine to plasma concentrations were, as expected, negatively correlated with annual rainfall. Expression analyses uncovered nearly 3,000 genes that were differentially expressed between steppe and forest samples and indicated that this species resorts to the “classical” gene pathways for water regulation. Differential expression across biomes also involves genes involved in immune and detoxification functions. Overall, genes that were differentially expressed showed a slight tendency to be more divergent and to display an excess of intermediate allele frequencies, relative to the remaining loci. Our results indicate that both differential expression in pathways involved in water conservation and geographical allelic variation are important in the occupation of contrasting habitats by the Patagonian olive mouse.