It is well-established that the kidney collecting duct (CD) plays a central role in regulation of systemic water homeostasis.  Aquaporin 2 (AQP2)-dependent water reabsorption in the CD critically depends on the arginine vasopressin (AVP) antidiuretic input and the presence of a favorable osmotic gradient at the apical plasma membrane with tubular lumen being hypotonic compared to the cytosol.  This osmotic difference creates a mechanical force leading to an increase in [Ca²⁺]_i in CD cells.  The significance of the osmosensitive [Ca²⁺]_i signaling for renal water transport and urinary concentration remain unknown.  To examine molecular mechanism and physiological relevance of osmosensitivity in the CD, we implemented simultaneous direct measurements of [Ca²⁺]_i dynamics and the rate of cell swelling as a readout of the AQP2-dependent water reabsorption in freshly isolated split-opened CDs of wild type and genetically manipulated animals and combined this with immunofluorescent detection of AVP-induced AQP2 trafficking and assessment of systemic water balance.  We identified the critical role of the Ca²⁺-permeable TRPC3 channel in osmosensitivity and water permeability in the CD.  We further demonstrated that TRPC3 -/- mice exhibit impaired urinary concentration, larger urinary volume and a greater weight loss in response to water deprivation despite increased AVP levels and AQP2 abundance.  TRPC3 inhibition/deletion interfered with AQP2 translocation to the plasma membrane in response to AVP and water deprivation.  In summary, we provide compelling multicomponent evidence in support of a critical contribution of TRPC3 in the CD for osmosensitivity and renal water handling.