Autosomal dominant polycystic kidney disease (ADPKD) is characterized by formation of cysts from tubular epithelial cells. Previous studies indicate that secretion of prostaglandin E₂ (PGE₂) into cyst fluid and production of cAMP underlie cyst expansion. However, the mechanism by which PGE₂ directly stimulates cAMP formation and modulates cystogenesis is still unclear since the particular E-prostanoid (EP) receptor mediating the PGE₂ effect has not been characterized. Our goal is to define the PGE₂ receptor subtype involved in ADPKD. We used a 3 dimensional cell culture system of human epithelial cells from normal and ADPKD kidneys in primary cultures to demonstrate that PGE₂ induces cyst formation. Biochemical evidence using real time RT-PCR mRNA analysis and immuno-detection indicate the presence of EP₂ receptor in cystic epithelial cells in ADPKD kidney. Pharmacological evidence using PGE₂ selective analogues further demonstrate that EP₂ mediates cAMP formation and cystogenesis. Functional evidence for a role of EP₂ receptor in mediating cAMP signaling was also provided by inhibiting EP₂ receptor expression using transfection of small-interfering RNA in cystic epithelial cells. Our results indicate that PGE₂ produced in cyst fluid binds to adjacent EP₂ receptors located on the apical side of cysts and stimulates EP₂ receptor expression. PGE₂ binding to EP₂ receptor leads to cAMP signaling and cystogenesis by a mechanism that involves protection of cystic epithelial cells from apoptosis. The role of EP₂ receptor in mediating the PGE₂ effect on stimulating cyst formation may have direct pharmacological implications for the treatment of polycystic kidney disease.